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 11th, 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 1st,
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
