Red Oak Capital Holdings, a commercial real estate finance company and Regulation A+ sponsor, has provided $10.18 million in bridge financing for a single-tenant manufacturing facility along Florida’s Space Coast.
The sponsor used the funds to acquire the 80,107-square-foot property, located at 4401 Fortune Place in Melbourne, Florida, and prepare the building for its new tenant, Blue Origin.
“Some would have viewed this transaction as merely a small industrial property in a relatively small market, but we recognized a significant opportunity to put our capital to work with established owners and operators,” said Red Oak’s chief executive officer, Gary Bechtel. “This sponsor not only offered significant real estate expertise and a well-located property, but also came to the closing table with a lease in place, secured by a strong tenant in a booming industry.”
Situated on nearly 10 acres within the Palm Bay-Melbourne-Titusville MSA, 4401 Fortune Place is a single-tenant industrial facility the borrower acquired for $12.5 million. Blue Origin, an aerospace company owned by Jeff Bezos, will take occupancy after the sponsor performs tenant-specific improvements.
Underwritten under Red Oak’s CorePlus Bridge Program, the interest-only loan carries an 8.50% note rate and a 24-month initial term with two six-month renewal options. The finance reflects a loan to “as stabilized” value of 67.39%.
The sponsor entity, Reich Brothers I LLC, is led by a pair of brothers with nearly 50 years of experience in acquiring, managing and disposing industrial properties and machinery. The borrower plans to exit the Red Oak loan via permanent financing upon completion of re-tenanting the building. Based on the new lease, the value of the property at the maturity of the loan would be approximately $15.65 million.
“This market has a strong and diversified economy, with an unemployment rate that’s trending closer to 2% each month,” stated Paul Cleary, Red Oak’s president and chief operating officer. “Significant investment by both NASA and private space companies like SpaceX and Blue Origin is creating thousands of high-paying jobs and sustaining a pace of activity not seen since the 1960s.”
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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