• Bridge Loan
  • 2-Year Term
  • 72.30%
  • Multifamily



A seasoned regional investor seeking to convert a pair of vacant Washington, DC buildings into an affordable housing community turned to Red Oak Capital Holdings for financing. The funds will be used to acquire and rehabilitate the properties into 22 multifamily units to be rented under the DC Housing Authority's Housing Choice Voucher Program (DCHCVP).

Hawaii Avenue Apartments consists of adjacent buildings located at 89 & 93 Hawaii Avenue NE in Washington, DC’s Brookland neighborhood. The borrower intends to convert the existing vacant shells into 12 two-bedroom and 10 three-bedroom apartments with projected monthly rents of $2,439 and $3,256, respectively.



Red Oak provided a $5.8-million bridge loan with a 12-month term with two 6-month extension options and an all-in interest rate of 11%. The non-recourse, interest-only debt represents an LTSV of 72.3% based on the property’s forecast stabilized value of $8 million. The loan was underwritten through Red Oak’s Participating Bridge Loan Program, in which the firm provides an equity component—thereby taking on some project risk—in exchange for a percentage of the project’s value creation at exit.

The rehabilitation of Hawaii Avenue Apartments is expected to be finished within a year, with full stabilization by late 2025, at which time the sponsor will likely pursue an exit via a sale.



The sponsor, Legacy Lofts II & III, is an experienced investor with more than 20 years of compliance with the DCHVP program, under which it owns and operates more than 200 units throughout the region. The DCHCVP, which uses federal and state funds to help subsidize rents for low- to moderate-income families across the city, has a months-long waiting list of more than 40,000 households.

Red Oak expects Hawaii Avenue Apartments to be well received given the demand for subsidized housing and the tight rental market in Northeast DC, which registered 94% occupancy and limited development activity in the third quarter. Further, units under the DCHCVP program tend to generate greater rents than could be achieved on the open market. CoStar reported average monthly rental rates for two- and three- bedrooms units in the property’s neighborhood of Brookland were $2,283 and $2,261, respectively, in December.