commercial loan scenario
Apartment Complex in Jacksonville, Florida
Property Description
A midsize "B Class" garden-style apartment complex located in Jacksonville, Florida. The property was purchased by a partnership for its strong intrinsic value and immediate upside through stabilized collections, as occupancy at time of closing was 75%, well below the 95% market average.
Investment Scenario
In an effort to stabilize collections, the investor group puts a professional management team in place and invests $400,000 on improvements. However, in year two of the business plan, an oversupply of single-family homes in the Jacksonville market drops occupancy back to 75%, and the property is unable to support its debt service. Additionally, the limited partner is not in a position to participate in a needed capital call, and the property is illiquid as a result of its current performance. With no capital or equity, the General Partner is low on options and they want to avoid foreclosure. Furthermore, how are they going to raise capital for an underperforming asset in one of the nation's toughest apartment markets?
Solution
Steelhead Capital provides the General Partnership with a $500,000 real estate "secondary". A real estate "secondary" is typically the purchase of a limited partnership that was previously formed to fund the purchase of a real estate investment. The $500,000 not only allows for a buy-out of the Limited Partner position but it also allows for excess cash for property needs. Steelhead Capital structures a loan tailored to help the partnership complete their business plan.
Loan Type: Real Estate Secondary, a buy out of original limited partner.
Loan Amount: $500,000
If you are interested in exploring a similar solution for your investments, please submit a secure loan request and one of our expert advisors will do their best to assist your financing needs.