Red Oak Capital Holdings, LLC has provided $5.46 million in financing for The Breakers Apartments, a 96-unit garden apartment community located in Ocean Springs, MS. Written under the firm’s Core-Plus Bridge Loan Program, the proceeds will be used to acquire and partially renovate the Jackson County property, which currently operates under the Low-Income Housing Tax Credit program. The interest-only loan has a two-year initial term with two extension options of six months each. The non-recourse debt also carries an all-in rate of 9.50% and represents 60.00% of the property’s stabilized value. Jeff Joyner, Hermann Wendorff, and Jesus Martinez originated and underwrote the loan for Red Oak.

Breakers Apartments is comprised of three, four-story buildings housing 96 one-, two-, and three-bedrooms units, as well as a clubhouse and maintenance building. Built in 2009, the 98% occupied community also features a business center, fitness center, laundry facilities, playground, outdoor pool, picnic area, volleyball court and 190 parking spaces. The community operates under a land use restrictive agreement (LURA) through 2047 that requires the units to be rented to households earning less than the area median income.

The sponsor intends to complete the renovations initiated by the seller last year as tenants are cycled through. Cosmetic upgrades including new flooring and paint, as well as HVAC maintenance, reglazing existing kitchen countertops and replacing appliances in many units. In line with the upgrades, the sponsors will attempt to increase rents by charging new tenants for utilities as well as employing more Section 8 or project-based vouchers that would allow for rents greater than the limits imposed by the LURA. The sponsors have successfully executed this strategy on other LIHTC properties in the past.