We’ve invested $4.4 million in the acquisition of a 14-acre property in Charlotte, North Carolina as the future site of a 309-unit apartment complex. This project is the latest example of our broader shift towards debt and debt-like investments that provide an attractive margin of safety, while still earning a strong return, in this case roughly 10% annually.
Business plan
The borrower intends to finalize permits for construction, a process that we expect will take around six to twelve months. Upon obtaining the necessary permits, they plan to secure construction financing and pay back our investment.
This type of investment is referred to as a bridge loan, since it provides a short-term financing solution until the next stage of financing — in this case, a construction loan — is obtained. From our perspective, the primary advantage of making a bridge loan is the ability to earn an attractive risk-adjusted return without committing our capital for a long period of time.
Why we invested
- Proximity to established university: The property is located within three miles of the University of North Carolina at Charlotte which enrolls 29,000+ students and employs 3,000+ in faculty and staff, making it the 4th largest university in the state.
- Experienced repeat sponsor: This is our second investment with Middleburg Real Estate Partners, a Virginia-based real estate operating company that specializes in the acquisition, development and management of apartment communities throughout the Mid-Atlantic and Southeastern states. Since its founding in 2004, the company has acquired and developed more than 16,000 apartment units, completing approximately $2.0 billion in transactions.
- Steps from transit: Just across the street from the property, the University City Blvd station on the LYNX light rail offers access to downtown Charlotte in approximately 20 minutes and UNC Charlotte in about five minutes.
