This case study highlights the conversion of a vacant office building in Portland, Oregon, into a daycare facility. RRA Capital arranged a $6.2 million first-position secured loan and committed to subsequent follow-on funding, providing capital for tenant improvements and inducements. The project will address the growing demand for daycare services in the area, as Alyssa Chatterjee, the director of Oregon's early learning system, stated, "the child care sector faces a crisis of available, affordable child care across the state," in an interview with the Capital Chronicle.
The property, constructed in Portland, Oregon in 1993, is a two-story, 10,200 square-foot office building. Before securing financing, the property remained vacant, presenting an excellent opportunity for redevelopment. RRA recognized the potential in repurposing the building to cater to the needs of the vibrant surrounding community.
As part of the lease agreement, the property was fully leased at closing, providing stability for the project. The tenant has committed to a 20-year lease term, incorporating annual rent escalations to ensure the financial viability of the venture. Once the property upgrades are completed and the daycare facility stabilizes, the sponsor plans to list the property for sale at $10 million as of July 2023. With a stable income-generating position and an established tenant, the sponsor will be well-positioned to maximize the property's value and capitalize on the demand for well-equipped daycare facilities in Portland.
RRA specializes in creating tailored financing solutions for unique projects and continues to be a trusted partner in the CRE financing industry. Get in touch if you have a project you would like to discuss.