OPPORTUNITY
A Dallas-area investor came to Red Oak Capital Holdings to obtain financing for an apartment community it purchased in 2021. The sponsor will use the funds to refinance a $1.8-million mortgage and implement a capital improvement program to boost the property’s value and appeal to prospective buyers.
Templecliff Apartments consists of a 21,630-square-foot garden-style complex with 26 units and parking for 53 cars. Situated on a 1.2-acre site at 1234 Templecliff Dr. in Southeast Dallas, the wood-frame and siding structure was built in 1961 and last renovated in 2021. The apartments are comprised of a mix of one- and two-bedroom units ranging from 750 to 1,125 square feet.
SOLUTION
Red Oak provided a $2.3-million bridge loan structured with a note rate of 10.00% and a 12-month term with two six-month renewal options. The debt represents 71.65% of the asset’s “As-Is” valuation of $3.21 million and 62.84% of its “As-Stabilized” LTV of $3.66 million.
After refinancing the existing mortgage and completing capital improvements—specifically, upgrading buildings’ plumbing system, thus reducing utility expenses—the borrower will exit the Red Oak loan with either permanent financing via its existing relationship with Freddie Mac or a sale.
CONSIDERATIONS
Dallas, Texas is one of the largest MSAs in the country and a market that’s experienced massive growth in recent years. DFW outpaced the nation last year in terms of job growth, and this is expected to continue thanks to the area’s business-friendly atmosphere, available space, and decent cost of living. Employment rose 4% in the 12 months preceding midyear 2023 thanks to 27 corporate relocations. This pace is expected to remain robust, given the number of planned relocations and expansions as well as the $4.8-billion expansion of the nearby DFW International Airport. The expansion of the labor pool will support local housing demand.
Dallas has not been immune to the weakness in the broader U.S. multifamily market but select pockets have been outperforming. Templecliff Apartments is in Southeast Dallas, which is not only near the metroplex’s employment centers but also boasts a healthy occupancy of 94.10% as of midyear 2023, with year-over-year rent growth of 12.30%. *
The sponsor, Aaron Jernigan, is a Dallas native and a successful commercial real estate professional with an extensive background in multifamily and value-add renovations. He launched Jernigan Capital Group in 2017 to specialize in the acquisition, analysis, and operations of large apartment communities in the Southeast. The firm has an in-house property management team and operates a portfolio of 42 apartments in the DFW area.
*Market data courtesy of Berkadia
This is the official website of Red Oak Capital Holdings. Due to a rise in imposters using names and logos of legitimate lenders, please be careful and confirm the legitimacy of those with whom you are doing business. You may contact the proper authorities such as the FTC, IRS or FBI, to report any suspicious activities. 12/22/2023
Copyright © 2023 Red Oak Capital Holdings. All rights reserved.
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This is the official website of Red Oak Capital Holdings. Due to a rise in imposters using names and logos of legitimate lenders, please be careful and confirm the legitimacy of those with whom you are doing business. You may contact the proper authorities such as the FTC, IRS or FBI, to report any suspicious activities. 12/22/2023
Copyright © 2023 Red Oak Capital Holdings. All rights reserved.
Privacy Policy Terms of Use