Dees Stribling, Contributing Editor
Houston–Gramercy Park Condominiums, a mid-rise multifamily property in the Medical Center submarket of Houston, has been sold out of bankruptcy. The U.S. Bankruptcy Court recently held a Section 363 auction in Reno, Nev., and the stalking horse bidder, Alliance Realty Partners L.L.C., ultimately closed on the property for an undisclosed sum.
The property was constructed in 2005 and 2006 and financed by more than 230 individual investors. In 2006, various entities that controlled the servicing rights initiated a series of bankruptcies with Asset Resolution, an entity affiliated with Silar Advisors L.L.C., which ultimately controlled the servicing. The property was foreclosed in late 2008, with 220 units remaining unsold.
Situs Inc., Houston-based brokerage arm of commercial real estate consultancy Situs Cos., represented the bankruptcy trustee in the sale, taking the fractured condominium property to the market over the past year during protracted court proceedings. Situs began marketing the property in September 2009, and shortly after that Asset Resolution filed Chapter 11 bankruptcy in New York. The proceedings were later transferred to Nevada, and ultimately converted to a Chapter 7 bankruptcy case in January 2010.
“This was the most difficult transaction that each member of our team has worked on during their careers,” Maury Bronstein, director of brokerage services for the Situs Cos., told MHN. (Other Situs employees working on the deal included David Malev, Randall Tuller and John S. Wall Jr.) “The property had been marketed previously and was never sold due to the situation. When we began marketing it for sale, many buyers, brokers and title companies said we would be unsuccessful due to the complexity and the outstanding liens.”
As it turned out, however, a total of 24 offers were generated, according to Situs. There was a great deal of interest in the property from a variety of buyers due to its location and the fact there are very few larger sites with comparable visibility in the market. The biggest challenge, Bronstein says, was keeping buyers interested during an extended period of litigation.
Bronstein adds that more such deals will probably be in the works in the future, though probably none quite as complex as the Gramercy Park Condominiums. “While this particular transaction was unique due to its complex situation–REO to Chapter 11 to Chapter 7; multiple jurisdictions for bankruptcy; a lender comprised of more than 230 individuals rather than one traditional lender–we expect to work on similar Class A multifamily properties in the future,” he says.