3 W. Main St, Suite 103
Irvington, NY 10533
X-Caliber presents a series of case studies that showcase versatile, innovative, and efficient capital solutions for property owners. This featured transaction highlights a bridge loan that facilitated the acquisition of a distressed affordable housing community and set the stage for a successful repositioning.
Property Overview
The C-class property, built in stages from 1974 to 1981, includes 360 one- and two-bedroom units in a prime location. The previous owner bought the property in 2019 as part of a larger portfolio but failed to provide proper oversight and maintenance. As a result, occupancy dropped from nearly full to 55%—well below the local average of 95%. Rents also declined to roughly 40% below market rates
The Solution
In late 2023, a new buyer sought immediate stabilization. X-Caliber provided a $23MM bridge loan to acquire the property and fund comprehensive interior renovations and targeted exterior improvements.
Once stabilized, the borrower will refinance with an FHA 223(f) loan.
Renovations and Restabilization
Before the 2023 acquisition, inadequate funding left the property in disrepair without onsite management or basic maintenance. Since the new borrower assumed ownership, most units have undergone complete interior overhauls:
- Luxury vinyl flooring
- Stone countertops in kitchens and bathrooms
- New appliances
- Modern bathroom upgrades
- Updated fixtures and lighting
- New air conditioning systems
Of the 360 units, 200 have received full gut renovations, while 160 received partial renovation and will undergo further improvements. The borrower also hired dedicated property managers and maintenance staff to strengthen operations and launched a rebranding effort with active marketing.
Borrower Benefits
The borrower specializes in acquiring and stabilizing underperforming assets, managing over 3,000 units at an average 95% occupancy. X-Caliber’s short-term bridge financing enabled the borrower to acquire the property and immediately address deferred maintenance, accelerating much-needed improvements to boost occupancy and market appeal. This short-term debt transitions seamlessly to a long-term, low-cost, and high-proceeds FHA loan, reducing risk while enhancing asset value.
Community Impact
The U.S. faces workforce and affordable housing shortage, with a 4.9 million-unit deficit in 2023 and only 70,500 affordable units scheduled for delivery in 2025. Rising construction costs, labor shortages, and higher mortgage rates further constrain supply in the face of growing demand.[1]
Revitalizing Hickory Ridge restores crucial workforce housing and offers rent subsidies to a portion of its residents, preserving much-needed affordability in the region.
Wrapping it Up
The Hickory Ridge Lakes Apartments case study shows how strategic short-term financing can reposition a distressed asset and address critical operational and capital improvements. Offering X-Caliber’s flexible solution allowed the borrower to acquire the property and begin targeted renovations to bolster its market competitiveness.
Key Outcomes
- Faster Capital Improvements: Aligned the property with current market standards
- Accelerated Lease-Up: Swift renovation timeline spurred occupancy gains
- Structured f=Financing Pathway: Short-term bridge financing transitions to a long-term, low-cost FHA loan
By upgrading units, improving occupancy, and aligning rents with local market conditions, the borrower transformed Hickory Ridge into a valuable, stable investment. The upcoming refinance with an FHA loan provides a solid long-term framework for continued financial success.
Sources: [1] https://www.brookings.edu/articles/make-it-count-measuring-our-housing-supply-shortage/
