Cottonwood Communities Inc., a publicly registered non-traded real estate investment trust, has closed on a preferred equity commitment of up to $9.9 million to develop Lector85, a 254-unit multifamily project on a 2.74-acre site in the historic landmark district of Ybor City in Tampa, Florida.
The total development cost is estimated at $53.3 million, and the project is sponsored by Milhaus LLC, a mixed-use development, construction and property management company that specializes in Class A, urban infill, multifamily residential buildings. Early construction has commenced and completion is anticipated during the first half of 2021.
Positioned senior to approximately $9.3 million in common equity, the $9.9 million preferred equity commitment bears an initial interest rate of 13 percent per year (accrued) and is expected to be drawn upon in stages as needed through the construction. The term of the investment is estimated at 48 months with one 12-month extension option.
“Ybor City is a historic, infill neighborhood that is attracting significant attention as an authentic cultural hub conveniently located near major Tampa job centers,” said Paul Fredenberg, chief investment officer of Cottonwood Communities. “We completed a successful apartment development project with Milhaus just last year and are pleased to be partnering with their team once again in what we believe to be one of the strongest multifamily markets in the country.”
The company noted that the project is situated in a walkable neighborhood filled with local restaurants, retail and entertainment, and located less than two miles from Downtown Tampa, six miles from the Westshore District and eight miles from the University of South Florida.
This latest investment follows Cottonwood Communities’ recent commitment to loan up to $10 million to develop Dolce Twin Creeks Phase II, a 366-unit multifamily project on nearly 11 acres located in the Dallas suburb of Allen, Texas.
Cottonwood Communities launched its $750 million offering in August 2018 to invest primarily in multifamily properties throughout the United States.