Sack Capital's $91 million structured deal for Step Up Housing includes property management duties

Sack Capital Partners and Align Finance Partners closed structured financing for Step Up Housing's acquisition of two California apartment communities, according to Connect CRE. The two properties contain 406 units. The combined price came to $91.35 million. The larger asset, Copper Creek, sits in Citrus Heights in the Sacramento metro. It is a garden-style community with 268 units. That property traded for $54.65 million. The other, Terramonte at Foothill, is in Pomona. It has 138 units. Its sales price was $36.7 million.

Sack, based in San Francisco, will provide asset and property management at both properties. CBRE represented the seller on Copper Creek. Institutional Property Advisors, the Marcus & Millichap division, arranged the Terramonte sale. David Feinberg, Sack's managing partner, called the pair "a foothold in two of California's most resilient renter markets" with "stable in-place cash flow and clear value-add path."

The numbers bear him out. Copper Creek pencils to roughly $204,000 a unit. Terramonte costs about $266,000 a unit. That is a 30% premium. The gap makes the financing underwriting a rent-growth bet on Pomona. The Sacramento asset starts with a larger margin of safety. Both are value-add deals; they just start from different places.

In private real estate debt, "structured financing" is a term of art. It covers any capital stack that is not a plain first mortgage: a bridge loan against a business plan, a mezzanine slice, or preferred equity that acts like debt. The announcement does not say how much of the purchase price is debt. Step Up Housing is identified only by name, so its equity contribution and balance sheet are unknown.

With the report silent on the stack, the per-unit math is the only clue to how the financing is built. Terramonte's $266,000-per-unit basis looks rich for Pomona. It likely implies a loan that in-place rents cannot cover without a future increase. That shortfall is typically filled with subordinate capital — mezzanine, preferred equity, or a seller note — rather than by stretching senior leverage. The senior piece is priced against current rent. The subordinate piece is priced against the business plan. The 30% gap between the two assets is the gap between those two underwriting methods.

Sack comes to the deal in two roles: capital provider and property manager. A passive lender can only hope the sponsor hits the numbers. A manager that answers to its own capital can change the business plan when the market moves. In value-add multifamily, that control is worth more than a few basis points. It may be why the deal took the structured route rather than an agency window, where underwriting is built for assets that already produce.

Align Finance Partners is named in the report but not described. That a second named party was needed suggests the structure was tailored to the assets. Private credit usually works this way: the documents are bespoke, the pricing is private, and the risk is borne by people who read the lease roll before they wire the money.

The two properties will test the structure from different starting points. Sacramento and Pomona are different economies. Their rent trajectories differ, and so does their exposure to California's housing politics. The structured layer gets repaid out of the difference between what these assets trade for today and what they rent for in a few years. That is the bet. The property manager just happens to be the one who placed it.