Red Oak Capital Provides Bridge Loan for Dallas Multifamily Property
Red Oak Capital Holdings LLC, a national commercial real estate finance company and Regulation A+ sponsor, has provided a $2.3 million bridge loan to the owner of the Templecliff Apartments in Southeast Dallas.
Red Oak says the borrower will use the funds to retire an existing mortgage and implement a capital improvement program to increase the property’s value and appeal to prospective buyers.
The bridge loan was structured with a note rate of 10.0% and a 12-month term with two six-month renewal options, the company says. The debt represents 71.65% of the asset’s “as-is” valuation of $3.21 million and 62.84% of its “as-stabilized” loan-to-value of $3.66 million.
“This transaction is yet another example of the broader challenges that investors are facing in today’s tight financing climate,” relates Gary Bechtel, chief executive officer of Red Oak. “Having acquired the property two years ago, the borrower needed additional funds to complete planned upgrades before putting the asset up for sale or securing permanent financing. After reviewing the sponsor’s business plan, Red Oak provided much-needed capital to bring that business plan to fruition.”
Templecliff Apartments consists of a 21,630-square-foot garden-style complex with parking for 53 cars and 26 one- and two-bedroom units ranging from 750 to 1,125 square feet. Situated on a 1.2-acre site at 1234 Templecliff Dr. in Southeast Dallas, the wood-frame and siding structure was built in 1961 and last renovated in 2021.
After refinancing the existing mortgage and completing the capital improvements—specifically, upgrading the building’s plumbing system, Red Oak says the borrower will exit the Red Oak loan with permanent financing via its existing relationship with Freddie Mac or possibly sell the asset.
“Like many other high-growth markets around the country, Dallas’ multifamily sector has experienced softening in recent quarters. However, Templecliff Apartments is located in a submarket that continues to outperform, given its proximity to employment centers and a strong labor pool that fuels apartment demand,” said Nick Jans, Red Oak’s regional manager, Central U.S. “As of midyear 2023, Southeast Dallas reported occupancy of 94.10% and year-over-year rent growth of 12.30%. Between the property’s location, the sponsor’s expertise and exit plan, funding this deal was an easy decision for us.”
Red Oak Capital Holdings is a group of commercial real estate capital entities that lends and invests on commercial real estate, raising capital through retail and institutional channels. The firm has more than $400 million of assets under management and commitments from both retail and institutional investors.
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