Red Oak Arranges Financing for Mixed-Use Building in San Diego
Red Oak, a Michigan-based commercial real estate finance company, has arranged nearly $13.8 million in financing for a four-story office over retail building in San Diego.
Red Oak, a Michigan-based commercial real estate finance company and sponsor of Reg A+ funds, has arranged nearly $13.8 million in financing for a four-story mixed-use building in San Diego.
The 23,500-square-foot property was vacant except for an existing restaurant on the ground floor. The upper three floors of the building are slated to be converted from office space to 27 micro-residential units averaging 336 square feet per unit. The 7,128-square-foot restaurant will be renovated, and the same operator plans to occupy the space upon completion. Additionally, the basement will be available for rent as either storage or back office for the restaurant.
“Red Oak is confident in the future success of this property given its highly desirable location within San Diego’s popular Gaslamp District and sitting across the street from a major office/technology project under development that involves the repositioning of the former Horton Plaza Mall,” said Gary Bechtel, chief executive officer. “This mixed-use conversion we’re financing couldn’t be better situated to capture demand expected from the revitalization efforts underway in the area.”
The conversion is estimated to take six-to-nine months to complete. According to Red Oak, during the renovation, the borrower plans to implement a marketing strategy to pre-lease the units, which will include a fully staged unit, a virtual tour online, and special invitation events. The timing will coincide with the opening of the Technology Campus at Horton, a seven-block, one million-square-foot mixed-use office campus with ground floor retail, located across the street from the property.
Red Oak said that the property has continued to increase in value since it was acquired by the borrower for $8.2 million in 2019.
“After a $5 million renovation, the property is estimated to have a value exceeding $20 million. This low basis will allow the sponsor to execute their business plan even if the market tightens,” notes Bechtel.
Red Oak Capital Holdings is a group of commercial real estate capital entities that lends and invests in commercial real estate, raising capital through retail and institutional channels.
