Red Oak Capital Holdings, a commercial real estate finance company and Regulation A+ sponsor, provided $3.25 million to refinance and renovate a multi-tenant industrial property in Chicago, Illinois.
The 92,511-square-foot industrial facility is owned by Chicago Property Investors LLC, and is located at 4850 W. Bloomingdale Ave.
Situated on a three-acre site in Chicago’s north industrial submarket, the asset was built in 1972 and most recently renovated in 2019.
“This sponsor has been investing in and developing commercial properties for over 40 years, having bought and sold more than 70 assets in the greater Chicago area,” said Gary Bechtel, Red Oak’s chief executive officer. “It’s particularly skilled at converting and rehabbing large single-tenant buildings into multi-tenant spaces.”
The borrower, which purchased the asset in 2018, intends to make about $350,000 in capital improvements to the property and increase occupancy and rental rates through hands-on management. Milwaukee Logan Investments LLC Series 3 Property Management will continue to handle all aspects of the leasing and operations.
The financing carries a 10.50% interest rate and is structured as a 12-month bridge loan with two 6-month renewal options. The company says the debt represented a current loan-to-value of 53% and a stabilized loan-to-value of 49%.
“Demand for space is high in the North Chicago industrial submarket, with a vacancy rate below 6% and little, if any, development activity,” said Roger Walls, Red Oak’s underwriter on the transaction, noting that the lease rates in the existing contracts are below market. “We recognized the significant upside potential in the property.”
Red Oak says the renovation and leasing efforts are expected to increase the property’s net operating income by nearly 50%. Once stabilized, the borrower plans to refinance the bridge loan with permanent financing or sell the asset. Bechtel added that the sponsor “has already had discussions with multiple potential buyers, including the tenants at the facility who are seeking to expand.”
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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