Multifamily Apartment Bridge Loan In Washington, D.C.

OPPORTUNITY

Here’s a borrower who takes the term, “Don’t mess with what’s working” to heart. When an experienced investor/developer of subsidized housing came across an opportunity to reposition another property, it turned to Red Oak Capital—for the sixth time. The sponsor was seeking funds to facilitate the purchase and complete upgrades on the garden community.

Built in 1965, the 9,600-square-foot property sits on a quarter acre of land within the Deanwood neighborhood of upper northeast Washington, D.C. Upon completion of the upgrades, all 12 of the renovated apartments will feature three-bedroom, one bath layouts of approximately 800 square feet each, with all-new appliance packages, flooring, bathrooms, bedrooms and living areas.

 

SOLUTION

Red Oak provided a $2.65-million bridge loan that carries a 10.00% fixed rate and an initial term of 12 months with two 6-month renewal options. The loan represents a 66.25% loan to “As-Stabilized” value. The borrower intends to exit the Red Oak Capital loan through a permanent loan refinance or sale.

 

CONSIDERATIONS

This represents the sixth time Red Oak has worked with this borrower, who has a proven track record of acquiring, renovating, leasing and refinancing multifamily real estate. The borrowing entity, 4725 Minnesota Ave NE, LLC, is led by a private investor who owns and manages more than 25 multifamily properties in the DC area. Having built this business for the past decade, the sponsor is a specialist in the region’s subsidized housing market.

All 12 units of the three-level community will ultimately be leased to residents under the District of Columbia’s Housing Choice Voucher Program, which has a lengthy waiting period for units. We have had great success in lending properties under these voucher programs.

Legacy Construction, LLC, a recognized regional development leader, has been tapped as general contractor for the renovations. Kanga Property Management will be responsible for continued day to day operations.