We continued to work towards stabilizing the asset after foreclosure and were eventually able to put a supplemental loan on the property with Freddie Mac. It was a fixed-rate loan of $5,000,000 with an interest rate of 4.82% and had coterminous maturity with the existing first mortgage. The additional loan increased debt service on the property by $325,400 annually. The total net proceeds generated from this transaction were $4,982,159. After holding $175,819 to replenish the operating cash account for transaction costs, $4,806,340 was distributed (non-taxable) to investors. The appraised value of the property had increased to $22,600,000, or by 91.3%.

Fast forward to 2024 with the senior loan maturity pending, we successfully closed on a refinance in September 2024. The new $25,050,000 Fannie Mae ten-year loan has a fixed 5.32% interest rate with interest-only payments for the first five years and a loan-to-value ratio of 75%. With the additional loan proceeds and higher interest rate, our annual debt service increased by $452,300. However, after repaying the existing loans, funding new escrows, paying transaction costs, replenishing the operating cash account, and reserving $1,500,000 for future capital improvements, the Fund was able to make a (tax-deferred) return of capital distribution to investors of $10,000,000.

The most recent appraisal listed an asset value of $33,400,000 which would indicate an equity balance at the property of $8,350,000 after netting out the new loan proceeds. This represents a 184% increase over the original $2,940,000 investment base.

When considering return on capital distributions, return of capital, and property appreciation, Towne Park has been a phenomenal investment for Timberland Partners.