‍THE OPPORTUNITY

Below-Market Rents in a Supply-Constrained Employment Hub

Hazelwood, Missouri sits at the center of a dense aerospace, defense, and logistics employment corridor along the northern edge of the St. Louis metropolitan area. Located less than a mile from St. Louis-Lambert International Airport and adjacent to major Boeing facilities, the submarket draws a steady base of workforce renters whose employment is tied to large, government-connected employers with long institutional roots in the region.

An experienced multifamily investment and operating company with a vertically integrated platform identified Hazelwood Forest Apartments as a compelling value-add opportunity. In-place rents were running 10 to 15 percent below comparable properties in the submarket, and roughly half the community's units still needed renovation. The previous owner had partially upgraded 94 of the 168 units over the prior decade but had not completed the program. The remaining 74 units sat unrenovated, and the partially renovated units had scope left undone.

The sponsor tracked the property specifically because of its proximity to the aerospace and defense employment base, which it viewed as a durable, recession-resistant source of renter demand. Although they were not the highest bidder, they won the contract on the strength of their reputation and their demonstrated ability to close. RRA Capital provided a $14,125,000 first-position bridge loan to fund the acquisition and a $2.5 million capital improvement program.

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‍THE PROPERTY

168 Units on 12 Acres, Directly Adjacent to a Major Employer

Built in 1974, Hazelwood Forest Apartments totals 137,760 rentable square feet across 168 units on 12.32 acres. The community has a distinctive layout: six residential buildings arranged in a loop around Chapel Ridge Drive, creating an internally focused campus feel with ample green space between buildings. The property includes 144 parking spaces and community amenities including a clubhouse, pool, laundry facilities, and package services.

The unit mix consists of 84 one-bedroom / one-bath units averaging 725 square feet, 42 two-bedroom / one-bath units averaging 870 square feet, and 42 two-bedroom / two-bath units averaging 960 square feet. At the time of acquisition, the property was 95 percent occupied with average in-place rents of $1,004 per month, producing strong baseline cash flow even before the renovation program was underway.

The property's location is a central part of its investment case. A major Boeing facility sits directly to the south of the property, and the Mallinckrodt Pharmaceuticals headquarters and additional Boeing operations are within a short drive. The St. Louis-Lambert International Airport is less than a mile north. For workers employed at these large, stable employers, Hazelwood Forest provides close, affordable housing in a submarket with effectively no new supply under construction.

THE RRA SOLUTION

$14.1MM Bridge Loan, Structured Around a Phased Renovation Program

RRA structured a $14,125,000 first-position bridge loan consisting of $11,625,000 in initial funding at closing and a $2,500,000 capital expenditure holdback to be drawn as renovation work was completed. The initial funding represented 75 percent of the purchase price and 72 percent of total estimated initial costs, including the interest reserve and closing costs.

The loan was structured with a 24-month initial term and two 6-month extension options, providing sufficient runway for the renovation program and lease-up. The capital expenditure holdback was sized to fully fund the sponsor's planned scope: completing the partial renovations on 94 units, executing full unit renovations on the remaining 74 units, and addressing a comprehensive exterior and common area improvement program spanning HVAC systems, roofing, parking, stairs, exterior finishes, the clubhouse, pool, gym, security, and utilities.

The property entered the loan with strong in-place cash flow, projecting a year-one debt yield of 10.3 percent on the initial funding. The combination of stable occupancy, a credible renovation plan, and a submarket with no new supply under construction made the risk profile well-suited to RRA's bridge lending strategy.

EXECUTION

Renovations Completed, Occupancy Climbed, and Boeing Expanded

The sponsor moved quickly after closing, electing to fund a significant portion of the renovation program with additional sponsor equity rather than waiting exclusively on loan holdback draws. This accelerated pace allowed renovated units to reach the market faster, driving rent growth and maintaining the strong occupancy levels the property had carried into the acquisition.

As upgraded units came online, rents moved up toward and in some cases above the projected market levels the underwriting had targeted. Occupancy held in the mid-90 percent range throughout the renovation period. The exterior improvements, including new roofing sections, HVAC replacements, stair repairs, exterior painting and staining, parking repairs, and pool work, materially upgraded the property's curb appeal and the quality of the amenity experience for residents.

During the loan term, Boeing Defense and Space announced it would relocate its headquarters to the St. Louis airport corridor as part of a $1.8 billion regional expansion, with the new headquarters less than half a mile from the property. The announcement reinforced the employment demand thesis that had originally attracted the sponsor to Hazelwood Forest and deepened the long-term rental demand base for the submarket.

THE EXIT

Freddie Mac Permanent Refinance, Well Inside the Loan Term

With the renovation program substantially complete, occupancy stable in the mid-90s, and the property generating income at or above underwritten levels, the sponsor moved to execute the planned exit: a permanent agency refinance. Within approximately 18 months of closing, well inside the loan's 24-month initial term, the sponsor refinanced Hazelwood Forest Apartments with permanent Freddie Mac financing arranged through PGIM Real Estate Finance.

The loan resolved cleanly, on plan, driven by a sponsor who executed the business plan as underwritten and had the capital base and operational discipline to move faster than the loan structure required.

This transaction reflects what RRA looks for in a bridge lending relationship: a well-located asset with a clear value-add thesis, a supply-constrained submarket with structural demand drivers, and a vertically integrated sponsor who can execute independently. Finding a good deal in a growing market with a sponsor that knows how to operate is the simplest version of this business done right.