Cottonwood Multifamily REIT II Inc., a Regulation A+ real estate investment trust, has fully subscribed its $50 million offering with no upfront fees.
“We are pleased with our capital raising efforts and believe our success is largely a result of our approach to long-term real estate investing, our track record and our investor-friendly no-load structure” said Daniel Shaeffer, CEO of Cottonwood.
The REIT’s sponsor, Cottonwood Capital Property Management II LLC, is responsible for paying all selling commissions, the dealer manager fee, and organizational and offering expenses without reimbursement.
Last month, the DI Wire reported that Cottonwood Multifamily REIT II purchased its first property, the Parc Westborough, a 249-unit Class A multifamily development located in Westborough, Massachusetts for $65.5 million. The REIT owns a 65 percent interest in the property, which was purchased in a joint venture, with affiliate Cottonwood Residential O.P LP.
In conjunction with the acquisition of the property, a Fannie Mae debt facility was put into place, providing financing for this acquisition and future acquisitions made by Cottonwood Multifamily REIT II.
Terms of the initial borrowing of $38 million, for purposes of acquiring Parc Westborough, include a 10-year loan term with full-term interest only at a rate of LIBOR + 1.48 percent, for a current all-in rate of 3.57 percent, as of closing. A LIBOR rate hedging instrument was also purchased, providing a 2.75 percent cap, resulting in a maximum effective interest rate of 4.23 percent.
Cottonwood Multifamily REIT II primarily invests in properties located in major metropolitan areas across the U.S. that have, in the opinion of the board of directors, attractive investment dynamics for property owners. These include population growth, active employment centers, and strong renter demographics.
The REIT partners with Cottonwood Residential, a fully-integrated owner/operator of multifamily properties with approximately $1.7 billion in total assets. Established in 2009, Cottonwood has ownership interests or structured investment interests (including development projects) in approximately 14,600 apartment units in 13 states.