We entered into the purchase agreement to acquire The Bowie while it was in the early stages of development for $43,000,000. The acquisition was financed with a $22,500,000 loan from Old National Bank with a floating rate of 2.2% over the daily SOFR Index. The loan had a five-year term and was interest only for the first three years. Floating the interest rate at closing allowed flexibility to track the interest rate environment and position ourselves to lock into a longer-term fixed rate loan with Fannie Mae or Freddie Mac when appropriate.

Fast forward to October 31, 2024, when we successfully closed on the refinance. The former loan’s floating interest rate was up to 7.31%. The new $27,537,000 Fannie Mae ten year, interest-only loan has a fixed 5.27% interest rate and a loan-to-value ratio of 62.4%. The annual debt service on the new loan will be $270,181 per year lower than the interest paid on our acquisition loan over the trailing twelve months.

After repaying the existing loans, funding new escrows, paying transaction costs, adding back internal escrows and reserving funds for future capital improvements, the Fund was able to make a total (tax deferred) return of capital distribution of $3,575,000 to investors.

The most recent appraisal listed an asset value of $44,100,000 which would indicate an equity balance at the property of $16,563,000 after netting out the new loan proceeds. This represents a 348% increase over the original $3,700,000 investment base in Park West.

When considering total distributions and property appreciation, these properties have been phenomenal investments for the fund.