San Diego, CA – Red Oak, a Michigan-based commercial real estate finance company, arranged $13,750,000 in financing for a four-story office over retail building in San Diego. The 23,500-square-foot property was vacant with the exception of an existing ground floor restaurant.
Gary Bechtel, CEO of Red Oak said, “Red Oak is confident in the future success of this property given its highly desirable location within San Diego’s popular Gaslamp District and sitting across the street from a major office/technology project under development that involves the repositioning of the former Horton Plaza Mall. This mixed-use conversion we’re financing couldn’t be better situated to capture demand expected from the revitalization efforts underway in the area.”
The upper three floors of the building are slated to be converted to 27 micro residential units averaging 336 square feet per unit. The 7,128-square-foot restaurant will be renovated, and the same operator plans to occupy the space upon completion. Additionally, the basement will be available for rent as either storage or back office for the restaurant.
The conversion is estimated to take six to nine months to complete. During the renovation, the Borrower will pre-lease the micro units with a high-end marketing strategy. This will include a fully staged unit, a virtual tour online and special invitation events. The timing will coincide with the opening of the newly released Technology Campus at Horton, across the street from the property.
The property financed by Red Oak has continued to increase in value since it was acquired by the Borrower for $8,200,000 in 2019.
“After a $5-million renovation, the property is estimated to have a value exceeding $20,000,000. This low basis will allow the Sponsor to execute their business plan even if the market tightens,” notes Bechtel.
