ST. LOUIS—As reported in GlobeSt.com last week, OakGrove Capital recently secured $23.2 million in Fannie Maeloans for Oak Residential Partners in itsacquisition of Pine Tree Club Apartments and Westbrooke VillageApartments, two market-rate apartment communities in St. Louis. AndScott Streiff, vice president at Minneapolis-basedOak Grove, now tells GlobeSt.com that although lenders are probablymore comfortable making loans in core markets like Chicago, withgood plans and managers, the GSEs and others will make thecommitments needed to bring back undermanaged properties.

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“When we saw the real estate, we saw the hurdles we were facedwith,” Streiff says, namely, that the previous owners had not hadthe capital to properly care for and update the properties, bothbuilt in the 1980's and with a combined 402 units. The deal tookseven months to complete, but Oak Grove officials knew going in itwould take a little extra work. “We thought there could be atremendous upside to both communities, so we took everyone downthere as a team,” including the Fannie Mae officials, “and goteveryone comfortable with what the plans were to fix up theproperties.”

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The communities had not received major capital improvements foryears, and Oak Residential plans on updating both interiors andexteriors “They now have the capital to do it.”

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And Streiff adds that they wanted to make sure the Fannie peoplealso understood the qualities of these St. Louis neighborhoods. “Wewere able to get over that fairly easy,” he says. Both are about 25minutes from the downtown and each has “a lot of new retail andother commercial construction. They have all the things you lookfor in a market.”

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“Would lenders rather lend in Chicago than St. Louis?” Streiffsays. “Absolutely.” However, since the recovery began, he thinks“we can feel very comfortable lending in a lot of areas that maynot have been as attractive in the past as they are now.” Andbetween Fannie and Freddie Mac there is “a lot ofcapital on the sidelines that's waiting to be deployed. There's thechance 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.