Red Oak provided $1,733,750 in financing to purchase and rehabilitate a three-story 40,000-square-foot office building located in Homewood, AL in the Birmingham market. The property at 85 Bagby Dr.is a multi-tenant general use office, located just off Hwy I-65 in the market’s CBD. The buyer is an experienced property developer and manager. The building was 80% occupied and will undergo regular updating and renovations to bring it up to a Class A/B building.
The borrower expects occupancy to hit 100% within six months. The site is located directly across the street from a new $21-million public safety building, which will house all public safety departments. Conventional financing was not available for the property as a result of maintenance and upgrades needed, as well as the high vacancy. Red Oak understood that the asset performance however was strong, with a net operating income of $243,541 and an expected DSCR of 1.25. The borrower’s exit strategy is to obtain conventional financing after the rehabilitation and stabilization is completed, in approximately 6 to 8 months.
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