OPPORTUNITY

Seeking capital to complete the refurbishment and re-tenanting of a suburban office property in Hoffman Estates, IL, a longtime regional property owner turned to Red Oak Capital Holdings for a solution. The sponsor, which initially purchased Prairie Stone Commons in March 2005, is an entity managed by Zaya S. Younan, an experienced and highly successful commercial property operator and investor.

Situated on a 7.56-acre site within the Prairie Stone Business Park in Northwest Cook County, IL, Prairie Stone Commons is comprised of two buildings at 5401 and 5407 Trillium Boulevard. The 101,981-square-foot Class B office property features a pair of three-story concrete and glass structures totaling 101,981 square feet. Built in 1996 and 2000, each building contains two wings connected by a walkway on the second and third floors, as well as lobbies on the first floors.

 

SOLUTION

Red Oak provided the sponsor with an $8.3-million bridge loan structured with an initial term of 24 months with two 6-month renewal options. The loan represents an LTV of 92.22%, and an LTSV of 67.76% based on its expected stabilized value upon completion. The debt carries an interest rate of 8.25%

The borrower plans to use the majority of the loan proceeds for tenant improvements and leasing commissions to stabilize occupancy before exiting the Red Oak loan through either permanent financing or via a sale. Though 17% occupied at the time the financing closed, the sponsor plans to achieve a stabilized occupancy by May 2025.

 

CONSIDERATIONS

Despite the lackluster performance of the general office sector, the combination of a highly experienced sponsor with a firm business plan and the property being located in a top-tier market made the decision to fund this loan an easy one.

Prairie Stone Commons is located in a top submarket within Greater Chicago, which itself ranks as the third MSA in the country, with a large, diverse economy. The borrower intends to use its affiliated management company to increase occupancy and rental rates at the property.

The sponsor entity, YP Trillium, LLC, is managed by Zaya S. Younan, President and CEO of investment and brokerage firm Younan Properties, Inc. The Los Angeles-based firm has successfully acquired, repositioned and managed office buildings within the top 10 markets of the U.S. for more than two decades. YPI has completed in excess of $6 billion worth of transactions on behalf of itself and other third-party investors.