$41M Funds Development of 134 Condos

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TEMPE, AZ-Weststone USA has obtained $40.5 million in construction financing, triggering the start of work on the 134-unit Northshore Condominiums. The Phoenix-based developer bought the 2.62-acre project site in June 2004.

"Presales are strong, the developer has been successful on previous projects so from that perspective, we didn't have a problem with it," says David Sotolov, vice president and senior loan administrator in Phoenix for Tustin, CA-based Fremont & Investment & Loan. Weststone has sold 96% of the condos, which will be delivering in fourth quarter 2007 at the intersection of Playa del Norte and Scottsdale Road.

Sotolov acknowledges to GlobeSt.com that the process did have its delays. First, he says a portion of the land is tied up in a ground lease although that will eventually be transferred to Weststone. Second, "getting comfortable with construction costs these days is a challenge," he adds.

The Northshore project is Fremont's first financing for Weststone, but Sotolov says the developer has a track record with three sold-out projects and strong presales on its 122-unit Vantage in the Ahwatukee submarket. Northshore's presales, which began in mid- 2005, are practically gone. As a result, foundation is now being poured.

Northshore will have five floors of condos and two levels of underground parking. It's designed so that 124 of the 134 units will have partial to full views of Tempe Town Lake and the balance with views of Camelback Mountain and Papago Peaks. Units average 1,400 sf. One-bedroom condos average $300,000 whereas two-bedroom units are running $300,000 to $1 million. The buy-in for a three-bedroom design ranges from $700,000 to $1.2 million.

Brad Coty with Bradford Mortgage Capital of Phoenix arranged the loan with Fremont as well as equity financing from New York Life Investment Management in New York City. The Fremont facility is a 24-month adjustable loan with interest-only payments at mid-300 basis points over the six-month Libor. The loan-to-cost and loan-to-value ratios range from 75% to 80%.