Creative Credit: Financing a Discounted Note in Oakland’s Multifamily Sector

Peachtree Group structured financing for the acquisition of a non-performing loan secured by a nine-building, 286-unit multifamily portfolio in Oakland, California. The borrower purchased the note for $30 million, significantly below the $57 million outstanding loan balance and far below the portfolio’s 2020 acquisition value of ~$90 million. Despite the distressed pricing, the underlying asset fundamentals remained strong, positioning the deal as a compelling opportunity amid Oakland’s broader market reset.

Traditional lenders often struggle to underwrite note purchases, particularly when pricing reflects deep market dislocation rather than recent comparable trades. In this case, the seller faced significant operational and financial distress and was offloading assets well below prior valuations. Banks may face regulatory constraints or internal credit hurdles that prevent them from financing discounted paper, even when collateral value is stable and income-producing. Recent Oakland trades at steep discounts, and a housing pipeline that delivered 10,000 new units since 2019, added further complexity that many lenders were unwilling or unable to navigate.

Peachtree Group recognized the real estate, not the distressed capital stack, should anchor underwriting. The team structured financing based on current collateral value, not the discounted note purchase price. The loan was sized at approximately 65% loan-to-value, supported by strong in-place rents of $1,500–$1,800 per unit and healthy debt-yield metrics around 9%.

This approach allowed the borrower to execute quickly, secure the property via deed-in-lieu of foreclosure, and stabilize an asset that legacy lenders viewed as too complex.

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“We’re not just buying loans, we’re evaluating real estate fundamentals and structuring transactions that make sense for both the borrower and our investors,” said Daniel Siegel, President and Principal, Credit Division, Peachtree Group.

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• Strengthened Peachtree’s presence in the middle-market lending space, demonstrating the firm’s ability to execute when banks pull back.
• Delivered strong risk-adjusted returns for investors through disciplined collateral-based underwriting and attractive entry basis.
• Created meaningful diversification within Peachtree Group’s credit portfolio.
• Captured a well-performing opportunity in a dislocated market, reflecting the types of transactions Peachtree Group expects to see more of as capital stacks across major metros right-size.

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