Red Oak Financial, a Michigan-based commercial real estate finance company, originated a $9.6 million acquisition and renovation loan for a 42-unit, low rise, multifamily property located in Washington D.C.
The building is currently comprised of one- and two-bedroom units, and the buyer plans to convert each unit to two- and three-bedrooms averaging approximately 700 square feet. There will be seven additional three-bedroom units added on the lower level for a combined total of 49 units. Construction is set to begin immediately and is expected be completed in six months.
Renovations will include new electrical and plumbing, in-unit washer/dryers, HVAC, flooring, cabinets, among other updates.
“We are excited about the potential of this property,” said Gary Bechtel, Red Oak’s chief executive officer. “Upon completion, it will be stabilized using the [District of Columbia Housing Authority’s] voucher program, which provides rental assistance to low-income families in the Washington, DC area, ensuring a long-term cash flowing asset.”
Bechtel noted that the Red Oak team has closed under the same plan across several other buildings in the Washington D.C. area.
Red Oak provided a one-year loan with an interest rate of 10 percent, structured with an 8 percent pay rate and 2 percent accrual rate.
Late last month, The DI Wire reported that Red Oak arranged a $6.8 million acquisition loan for a 36-unit multifamily apartment in Washington, D.C.’s Fort DuPont Park neighborhood.
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 GP. Red Oak Financial originates short-term commercial real estate loans for sponsors seeking $1 million to $15 million of debt financing.
