Red Oak Capital Holdings, LLC provided a combined $10.30 million in financing for a pair of multifamily properties located in metropolitan Indianapolis.

The separate bridge loans funded the acquisition and planned renovations of the assets by the sponsor, a value-add investor with extensive experience in the local market.
 
At $8.60 million, the loan for Canterbury House Apartments in Lawrence, IN accounted for the bulk of the financing total. Structured under Red Oak’s Core-Plus Bridge Loan Program, the loan has a three-year term and an LTSV of 65.90%. Located on 5.8 acres at 7955 Kingsmead Drive, the 84% occupied community features 110 one- to four-bedroom units in seven buildings, as well as a pool, playground, and clubhouse.

Please be aware that phishing campaigns and deepfake images/videos aren’t intended only for consumers. They target businesses, too, and the commercial real estate industry is not immune. Connect CRE has learned of a rise in fraud cases where criminals are using old corporate logos and materials of legitimate companies and using them to convince unsuspecting borrowers to submit personal data. 

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Red Oak Capital Holdings, a commercial real estate finance company based in Grand Rapids, Mich., has provided a $2.65 million bridge loan for the purchase and refurbishment of a garden apartment community in Washington, D.C.

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PRIVATE LENDING TITANS

By: The Originate Report Team

Gary Bechtel

CEO, Red Oak Capital Holdings

Why did you choose Private Lending?

I have been in the Commercial Real Estate Finance industry for over 36 years, in different capacities, at many companies. The last 25 years has largely been spent on the lending side, building/expanding, or re-tooling platforms. My last two companies, Money360 and Red Oak Capital, were both in the Private Lending space. I like this space because while we still operate in a regulated environment, it does not have the same oversight constraints as a traditional lender like a Bank, Life Company, or Credit Union. This allows us to be more nimble, creative, and entrepreneurial in our deal structures. We can move much more rapidly to identify market opportunities and address them, which brings value to our investors, intermediaries, and borrowers.

What is your current role and what do you do day-to-day?

I serve as Chief Executive Officer for Red Oak Capital Holdings and Oak Real Estate Partners, an affiliated Institutional lending platform. I also sit on our Board of Managers and Investment Committee. My day consists of capital raising and loan originations efforts, as well as running overall strategy and managing our investment thesis. As we are still establishing our brand in the marketplace, there is a fair bit of travel involved to events and conferences in support of these efforts.

What excites you about your role today?

I love to be part of building businesses and that is why I joined Red Oak two years ago. I can leave an imprint on the business as we continue to retool and grow it, expand our product lines, recruit people, and better establish the brand. Being able to interface with our employees, investors, capital partners, intermediaries, and borrowers gives me a great view of the market, the opportunities in it, and how we can address its continually changing dynamics.

Can you explain a time where you faced adversity or had struggles early on in your career? Where did it all begin? How did these experiences mold & shape you into the leader you are today?

How much time do you have?! I generally think I have been fortunate during my career. Having experienced a few down cycles clearly has presented adversity, but everybody was going through it at the time. I have been part of closing businesses and laying off large numbers of people or being part of those downsizings/shutdowns.

I think going through adversity or tough times gives you a better perspective for the future for addressing issues that arise and presenting solutions to them since you have already lived through something similar! I have always tried to take a long-term approach to building or retooling companies, so the lessons learned from the past help guide me in some of my decision-making processes today.

Is there anything that you wish you could go back & tell yourself at the beginning of your career?

Be prepared to get your teeth kicked in on regular basis! Just because it is going great today does not mean anything, as the business can change very quickly based on factors within the industry, the country, and the world that you have no control over. Be patient, learn all you can about the business, and do not burn any bridges. The person working for you today may be your boss in the future.

Who is someone that has had a significant effect on your career and why?

I have been very fortunate to work with a number of great people during my career. I would say the person that was instrumental in helping to get me into the business is Jim Warmington of Warmington Homes. Without him taking me under his wing and making introductions, I probably would not be in the business today. Another person who impacted my career would be my first boss, Fritz Swinehart. He taught me the business basics but also taught me how to conduct myself and provide great service to clients, as well as maintain the ethics for long-term success.

What has been your favorite aspect of being an in private lending over the years?

I am proud to have been part of a growing area of the industry that really did not exist twenty years ago. I started in the Life Company space back in 1986, and while that part of the mortgage business will always be here, it is very conservative in nature and typically only provides long-term financing, whereas the Private Lending space can provide all different forms of capital in a more rapid, and in certain cases, aggressive manner. That ability to be creative and responsive to changing markets conditions is very appealing to me and provides an opportunity to fully utilize the gray matter.

What would you consider to be the highlight of your career thus far?

That is a tough one. Being part of the build-up and sale of Belgravia Capital to FINOVA and growing that to a multi-billion-dollar platform (before closing it down as FINOVA imploded) was one. Another would be returning and helping to triple the size of Johnson Capital from $1B to over $3B in annual loan volume. Most recently, being involved in helping take Money360 from $25M in closed volume and six people when I arrived in August 2015 to over $1.8B in closed loan volume and two successful CLOs and 40 people in early 2020 before COVID-19. Our entire story has not been written yet, but I am thrilled about what we have been able to accomplish in a relatively short period of time at Red Oak/Oak Real Estate. We have built a platform that exceeds $300 million in AUM.

What do you enjoy most about your job? Least?

What I enjoy most about my job is working with great people, providing unique financing solutions to our clients, allowing our investors opportunity to receive above-average risk-adjusted returns, and being part of the building of successful platforms. What I do not like, and we are seeing this regularly, is companies that get into the business and misrepresent themselves as lenders when they do not have capital to lend. When they do not perform, they damage the reputation of those of us that are viable platforms. I like to call these groups “blenders,” as in, brokers representing themselves as lenders.

Is time or money more valuable and why?

Today, I would have to say time, but do not get me wrong though, I still like the money part! You can never get the time back; you can always make money.

How do you make sure your company stays ahead in this industry?

Never be satisfied with where you are today. Always be looking to how you can improve the business and expand your product offerings to take advantage of changes in the market, as it is never static.

What tools do you use to aid you in your role to be most efficient, organized, and focused?

I have always tried to utilize technology in business, but I am pretty basic in my approach. I use my yellow notepad and make sure I return calls and emails promptly.

Has your role changed significantly to address the current environment?

I have always been a hands-on type because I love the process of structuring deals and helping in our teams’ sales efforts. Whether on the origination or capital markets side, you have to adjust as the markets and business environment changes. What worked six months ago generally will not work today for many reasons.

What advice would you give to someone who has just started out in private lending?

Be prepared to pay your dues and learn the business first. Do not think this business is all about making money, unless you want to have a short career.

How will private lending change to adapt to the current market trends?

As I have stated a few times, though regulated, the private lending business tends to be much more entrepreneurial than the traditional lending business, and the people within in it are very quick in coming up with new loan products, exit strategies, and marketing to address the changing conditions. This is one of the fun parts about the private lending space.

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Red Oak Capital, a Michigan-based commercial real estate finance company, has completed four acquisition loans totaling $11.3 million in Georgia, Ohio, and Louisiana.

The transactions involve five properties, including Executive Plaza in New Orleans; The Dean Place Apartments in Dayton, Ohio; Executive Office Park and Greenbriar Office Park in Atlanta; and Airport Office Park in East Point, Georgia.

“Red Oak continues to deploy capital into commercial real estate assets that meet our lending criteria…,” said Gary Bechtel, chief executive officer. “We are currently sourcing more than $300 million in new deal flow per month, which enables us to select and fund on properties across the U.S. with sophisticated sponsors we are confident will execute on an investment and repositioning strategy that breathes new life into these assets.”

Executive Plaza in New Orleans

Red Oak completed a $5.25 million bridge loan for a 114,100-square-foot, 11-story, Class C office building in New Orleans. The sponsor plans to make the capital improvements and repairs designed to attract new tenants and increase occupancy. There are several retail amenities in the nearby area providing food, office supplies and technology support.

Airport Office Park in Georgia

Red Oak completed a $2.81 million bridge loan for the acquisition of Airport Office Park, a 68,340-square-foot, Class C office complex in East Point, Georgia, a suburban Atlanta market. The property has access to Interstates 285, 75, and 85, Hartsfield International Airport, and Camp Creek Marketplace, a destination retail center that includes a Target, Lowe’s, and Staples. Red Oak noted that the property’s market rent trend has outperformed the Atlanta average over the past few quarters.

Executive Office Park and Greenbriar Office Park in Georgia

Red Oak completed a $1.69 million bridge loan for the acquisition of Executive Office Park, a 34,300-square-foot property situated on a 5.6-acre site, and Greenbriar Office Park, a 34,300-square-foot property situated on a 4.5-acre site in Atlanta. Both office properties are Class C quality and are located in the North Clayton/Airport submarket with Hartsfield International Airport less than 10 miles away.

Dean Place Apartments in Ohio

Red Oak completed a $1.5 million bridge loan for the acquisition of Dean Place Apartments, a 34-unit apartment building in Dayton, Ohio. The buildings are comprised of six one-bed, one-bath units and 28 two-bed, one-bath units that average 854 square feet. The property is near the University of Dayton, transportation corridors, and bus routes.

Red Oak Capital Holdings is a family of commercial real estate finance and investment companies that includes Red Oak Financial, Red Oak Holdings Management, and Red Oak Capital.

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For Hessam Nadji, CEO of Marcus & Millichap, the 2021 Western States CREF Conference held between Sept. 8-10 was his first large-scale public gathering since the onset of the pandemic 18 months ago. He used the occasion to provide a review of the progress that the economy generally and commercial real estate in particular have made during that time.  

Key differences between the global financial crisis that took hold in the fall of 2008 and the downturn that derived from the pandemic were in the nature of the 2008 crisis and the 2020 one, and in the relative speed of government response. The GFC, Nadji pointed out, was the outcome of a “sick” financial system, whose ailments eventually permeated all aspects of the economy.  

By comparison to the lag between the first signs of an impending financial crisis and the actions taken by the Federal Reserve in 2008, government response last year was much quicker.  “This notion of a swift response, having come in seven weeks versus 13 months and 25% GDP versus 6%, is the underpinning of everything we’re experiencing today and will for at least the next 12 to 18 months,” Nadja told Western States attendees gathered at the ARIA Resort & Casino in Las Vegas.  

Nadji also shared the stage in a one-in-one interview with a fellow commercial real estate veteran and fellow CEO, Gary Bechtel, who leads Red Oak Capital Holdings. Bechtel provided his take on the capital markets and CRE fundamentals, noting that there’s lots of capital in the market and investors are getting outbid as a result.  

Bechtel also observed that most asset classes have rebounded, even hospitality, although urban office still has a tough row to hoe. He said the current low-interest rate environment isn’t expected to change in the near term. 

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