According to Avant managing principal Adam Luysterborghs, the Class B property was only 40% occupied at the time of acquisition, but its location in a desirable submarket presented the sponsors with an opportunity to turn around an underperforming asset with substantial upside. He describes the sponsors as experienced multifamily investors with a strong operational presence in the local marketplace. "He had a management team and work crew almost on site already," the Avant exec tells GlobeSt.com. "He's very familiar with the kind of tenant that lives in the area, which made us very comfortable with the transaction."

Lakewood Estates bought the property for $5 million and budgeted an additional $1.5 million for improvements. The fact the owner had successfully rehabbed and leased up two similar properties in the neighborhood was instrumental in persuading Avant to get involved. "For someone else to do the same deal, they would have higher costs," says Luysterborghs. "He had boots on the ground to do the work and rehab the property. He knew what he was doing."

The interest-only loan, which has an interest rate of 5.25%, is convertible to permanent financing upon completion of the renovation and lease-up. It has a loan-to-value ratio is 70% and was secured through Avant's relationship with a community bank.