commercial loan case study
Apartment Complex
in Dallas, Texas
Property Description
A large Class A institutional apartment complex built in 1999 as one of the pre-eminent multi-family assets in the Dallas area. The property consists of large luxurious floor plans in a unique rental community offering unmatched resort-style amenities. The property was purchased by a partnership for its strong intrinsic value and location in a growing area of North Dallas.
Investment Scenario
The partnership self-managed the asset and intended to sell in late 2007. However, the disposition effort was hindered as a result of the initial stages of the liquidity crisis, which crippled real estate transactions; especially for larger properties. Additionally, and since that time, the General Partner had incurred a sizable debt to the partnership as it needed to fund capital improvements necessary to position the property for sale. In today's environment, the General Partnership needs a solution that would allow them to extend the hold period of the asset and provide additional capital for physical improvements to remain competitive in the market.
Solution
Steelhead Capital provides the members of the partnership with a $1,800,000 Preferred Equity Loan. This loan would be prioritized ahead of member equity and would receive an 18% preferred return in addition to its return of capital prior to distributions to members. Steelhead Capital structures a loan tailored to help the partnership extend their hold period to a more favorable disposition environment and make improvements to benefit the property's future marketability.
Loan Type: Preferred Equity Loan.
Loan Amount: $1,800,000
If you are interested in exploring a similar solution for your investments, please call Matt McLeod, Vice President of Steelhead Capital, directly at (415) 398-2271.