ST. LOUIS—As reported in GlobeSt.com last week, Oak Grove Capital recently secured $23.2 million in Fannie Mae loans for Oak Residential Partners in its acquisition of Pine Tree Club Apartments and Westbrooke Village Apartments, two market-rate apartment communities in St. Louis. And Scott Streiff, vice president at Minneapolis-based Oak Grove, now tells GlobeSt.com that although lenders are probably more comfortable making loans in core markets like Chicago, with good plans and managers, the GSEs and others will make the commitments needed to bring back undermanaged properties.
“When we saw the real estate, we saw the hurdles we were faced with,” Streiff says, namely, that the previous owners had not had the capital to properly care for and update the properties, both built in the 1980's and with a combined 402 units. The deal took seven months to complete, but Oak Grove officials knew going in it would take a little extra work. “We thought there could be a tremendous upside to both communities, so we took everyone down there as a team,” including the Fannie Mae officials, “and got everyone comfortable with what the plans were to fix up the properties.”
The communities had not received major capital improvements for years, and Oak Residential plans on updating both interiors and exteriors “They now have the capital to do it.”
And Streiff adds that they wanted to make sure the Fannie people also understood the qualities of these St. Louis neighborhoods. “We were able to get over that fairly easy,” he says. Both are about 25 minutes from the downtown and each has “a lot of new retail and other commercial construction. They have all the things you look for in a market.”
“Would lenders rather lend in Chicago than St. Louis?” Streiff says. “Absolutely.” However, since the recovery began, he thinks “we can feel very comfortable lending in a lot of areas that may not have been as attractive in the past as they are now.” And between Fannie and Freddie Mac there is “a lot of capital on the sidelines that's waiting to be deployed. There's the chance to get a lot of things done.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
