In February 2021, Freedom Financial Funds, LLC became a capital provider to Fortify Holdings, Inc. of Portland, Oregon, when it funded a $20,200,000 portfolio acquisition and redevelopment loan for three existing motels in Medford, Oregon.
The City of Medford was already challenged by a shortage of affordable housing when 2020’s wildfires destroyed hundreds of homes, displacing thousands of residents. Medford is currently facing an estimated deficit of 3,000 housing units, and hundreds of families remain in congregate housing.
The new project underway by Fortify Holdings will convert three motels into 327 beautifully redesigned studio apartments, providing safe, comfortable and low-cost housing.
According to Freedom Financial Funds’ Eric Shoemaker, the company was delighted to participate in this transaction that is not only financially sound but good for the community. “We look for markets where the demand for housing exceeds current inventory, and Medford now has a sub-3 percent vacancy. Fortify is a sophisticated, well-capitalized development group and is coming in with a program to make these units exceptionally nice for residents. They are an investment-grade sponsor, but due to the complexity of this deal and the quick close of escrow, bank financing wasn’t an option. This was a perfect transaction for us.”
The State of Oregon is also allocating funds through a program designed to find bridge housing for fire-affected families. “This program will provide cashflow through the renovation and construction process, reducing our risk so that we could, in turn, reduce the rate we charged to our borrower,” Shoemaker added.
The studio apartments will be priced for virtually all Oregon workers. Located in the downtown area, the units are within walkable distance to public transit and all the amenities in Medford’s urban core.
Freedom Financial Funds closed this transaction successfully in under five weeks. The three properties were owned by different sellers and consolidated into a single closing. “It required some nuance, but we still went through a traditional underwriting process,” Shoemaker said. “We don’t have the layers of bureaucratic architecture a bank would have. We have seven investment committee members and six team members, and our investment committee works hand in glove with our team. Communication flows rapidly and allows us to get deals —even those as complex as this one — done quickly.”
Sean Keys, CEO of Fortify Holdings, said, “We were introduced to Eric Shoemaker in the Portland office with five weeks prior to the scheduled closing dates on three properties in Medford, Oregon. With a lot of moving pieces, the team at Freedom Financial Funds, including Eric, Michael Klein, and Minda Johnstone, were quickly able to grasp our short and long term goals and provide a meaningful financial solution. While we know we weren’t their only transaction at the time, they were thoughtful and responsive, and worked diligently to get us to the finish line. In fact, we closed a day earlier than anticipated! Overall, we were extremely pleased with the loan process at Freedom Financial Funds and look forward to building the relationship over time. We would highly recommend the team to other real estate investors looking for bridge and/or construction loans.”
About Fortify Holdings, Inc.
Based in Portland, Oregon, Fortify Holdings is a leader in multi-family housing. The company restores existing properties and builds new communities from the ground up with the goal of creating and maintaining quality residences that individuals and families are proud to call home.
Fortify strives to meet the housing needs of today, while ensuring the sustainability of properties into the future.
For more information, visit: https://fortifyholdings.com.