Week In Review - August 1st, 2014

Meredith Corp. Gets Midtown Office in $407.5m Gannett Divestiture

As part of the sale, Meredith acquired the office complex that serves as the headquarters for both of the Phoenix stations for $9,878,335 or $110.58 per square foot in an all cash deal. The two 2-and-3-story buildings total 89,335 ft² and are located at the northeast corner of 7^th Avenue and Missouri Avenue. The buildings were built in 1974 and 1982 on a 4.67 acre site zoned C-2 and P-1. 

Eight-Figure Apartments: Elliot Crossing Sells for $22.25m

Elliot Crossing Apartments was acquired by Bridge Investment Group Partners for $22.25m or $90,080 per unit. Bridge Investment Group Partners paid $5.563m in cash for the property and secured $16.687m in new agency debt with KeyBank Real Estate Capital, assigned to Freddie Mac at origination. The seller, Omaha, Nebraska-based Slosburg Real Property, acquired the property from Sentinel Realty Advisors on March 12^th, 2010 for $11.85m or $47,975 per unit—53.25% of the current sales price.

Taylor Morrison Buys Trovita Norte Phase I for ~$7.8m

After more than a year in escrow, Taylor Morrison has closed on Phase I of Trovita Norte—a recently-platted subdivision at the southeast corner of Brown Road and Val Vista Drive in Mesa—for $7,797,492 or $4.90 per square foot. Today’s all-cash purchase was pursuant to a March 28^th, 2013 purchase and sale agreement between Taylor Morrison and the seller, Michael B White, which also secures a purchase option on Phase II to the benefit of Taylor Morrison. The sale price equates to $139,240 per planned lot or $1,392 per planned front foot.

PB Bell Acquires Multifamily Portfolio from Chinese Investor for $168.5m

David Liu—an American citizen of Chinese descent based in Beijing and Los Angeles—through his company, Standard Portfolios, has completed the sale of seven apartment complexes totaling 2,749 units for $168.5m or $61,073 per unit. The buyer was a joint venture formed by Phoenix-based multifamily investor PB Bell and New York-based private equity firm Stonecutter Capital Management. Based on the aggregate 2007 sale price of $133.1m and the current sale price of $168.5m, Mr. Liu earned a 26.6% absolute rate of return on his investment, net of holding costs and operational proceeds.

One Day after $165.8m Portfolio Sale: $75m in Sales and a $60m Notice

Before the ink was dry on PB Bell’s acquisition of seven multifamily assets from the Bethany Kingdom I portfolio, an additional 775 units in two assets were sold for a combined $75.5m and a third, 856-unit asset was noticed for trustee sale on a $59.4m outstanding debt. The assets in question are the 360-unit Verrano Townhomes which sold for $49m, the 415-unit Colonnade Apartments which sold for $25.5m and the Saratoga Ridge Apartments, which were noticed for trustee sale by an affiliate of AIG Life Insurance Company.

Evergreen Devco Sells Goodyear Centerpointe Improvements for $44.5m

Alexander Haagen III of Haagen Co. paid $44.5m for the improvements in the Goodyear Centerpointe power center in a deal valuing the 324,068 ft² of built retail property at $137.32 per square foot. The seller was the original developer and ground lessee for Goodyear Centerpointe, Evergreen Development Company. Haagen tendered $15.6m in cash for the buildings and secured an additional $28.9m in financing with RGA Reinsurance which matures in August of 2034. 

PB Bell Acquires Multifamily Portfolio from Chinese Investor for $168.5m

By: Paul Dionne | Vizzda 

VizzdaNews described July as “one of the busiest months for multifamily sales since the early 2013 acquisition of Archstone Enterprises by Equity Residential and Avalon Bay Communities,” following the $22.25m sale of Elliot Crossing—the fifth eight-figure multifamily deal in little more than a week. While we stand by that assertion, it appears as though we spoke too soon. David Liu—an American citizen of Chinese descent based in Beijing and Los Angeles—through his company, Standard Portfolios, has completed the sale of seven apartment complexes totaling 2,749 units for $168.5m or $61,073 per unit. The buyer was a joint venture formed by Phoenix-based multifamily investor PB Bell and New York-based private equity firm Stonecutter Capital Management. PB Bell tendered $30m in cash and secured the seven properties under a $149.5m purchase money deed of trust with Prime Financial Partners.

The properties included in the portfolio sale—as well as the itemized sales price from 2007, the last time these properties changed hands outside the purview of bankruptcy court—are detailed below:

Complex	City	Price	Units	Price/Unit	2007 Price	Depreciation
Tela Verde	Glendale	$10,428,354	196	$92,347	$18,100,000	-42.38%
San Tan Crosswinds	Chandler	$16,400,000	374	$56,150	$21,000,000	-21.90%
Sienna Springs	Phoenix	$16,600,000	395	$47,468	$18,750,000	-11.47%
Alante at the Islands	Chandler	$33,236,700	320	$127,656	$40,850,000	-18.64%
Laguna Village	Chandler	$38,200,000	460	$97,826	$45,000,000	-15.11%
Whispering Meadows	Mesa	$24,175,146	432	$77,778	$33,600,000	-28.05%
Tuscany Palms	Mesa	$29,459,800	582	$65,464	$38,100,000	-22.68%

These seven properties were previously acquired as “Bethany Kingdom I” by now-defunct Bethany Holdings Group in June of 2007 for $215.4m or $78,072 per blended unit from Bascom Ventures. Concurrently with that prior sale, Bethany also acquired “Bethany Kingdom II” a 2,419 unit portfolio of five apartment complexes for $212.1m for a total outlay of $427.5m for 5,178 units or $82,561 per blended unit. The Bethany Kingdom I portfolio acquisition was financed with $164.5m in new debt with Lehman Brothers. This note was later securitized by Lasalle Bank as a Commercial Mortgage Backed Security (CMBS) bearing 5.72% per annum interest and maturing July 11^th, 2012. At the time of securitization, the portfolio was generating $11,114,693 in net operating income on 85.3% occupancy for an appraised value of $231.7m. 

That lofty valuation was never realized, however, and as credit conditions deteriorated throughout 2008 and early 2009, Bethany Holdings Group was forced to file for Chapter 11 Bankruptcy protection. San Diego-based distressed property specialist, Trigild Inc., was appointed receiver for the seven property portfolio following the bankruptcy filing and a bankruptcy order for sale was approved by the court in September of 2010. On October 1^st, 2010, Mr. Liu acquired assets of the Bethany Kingdom I portfolio for $133.1m or $48,242 per blended unit. Mr. Liu paid $10.1m in cash for the seven properties and assumed the existing $164.5m CMBS debt, amended and restated at the time of sale to reflect a principal balance of $123m. While the 2010 acquisition price is not itemized—and therefore doesn’t allow an asset-by-asset comparison as was possible for the 2007 acquisition price—based on the aggregate 2007 sale price of $133.1m and the current sale price of $168.5m, Mr. Liu earned a 26.6% absolute rate of return on his investment, net of holding costs and operational proceeds.

To Contact the Author:

Paul Dionne – pdionne@vizzda.com