Inside the Deal: Investor Snags ‘Failed Condo’ for Discount in Raleigh, N.C.

By Keat FoongExecutive EditorRaleigh, N.C.—Polo Run Apartments may have been a “failed condo” project, but it sure has a profitable location. The property was purchased by a New York-based investor for a discounted price of $12.232 million, or $44,000 per unit, in the Research Triangle market. This is considered one of the stronger markets in the Mid-Atlantic/Southeast region, says Jeffrey Gorodensky managing director of the Sperry Van Ness/FG Commercial Real Estate Services office in Lodi, N.J., who represented both the buyer and the seller. “The market seems very frothy here,” he says. The sale, says Gorodensky, was an “off-market” deal and was never listed. The original Frenchwood Pointe Apartments was foreclosed on in January, one of over 10 properties that were foreclosed on, he says. The original developer filed for bankruptcy, he says. The buyer is a New York-based investment entity Polo Run LLC, and the seller is Springfield, Mass.-based North Carolina Raleigh LLC. Located at 1822 Generation Drive in Raleigh, N.C., the 278-unit, 28.32-acre Polo Run Apartments was built in 1973. It will be rehabbed by the new owner and rented as apartments. The community includes a clubhouse, swimming pool, tennis and basketball courts and walking paths. The property was 55 percent occupied at the close of the escrow as it was partially vacated to allow for the condominium conversion, says Gorodensky.  The sale price was discounted below what a stabilized Class B property would normally sell for in the marketplace, says Gorodensky. Multifamily properties, from flats to townhomes, would typically sell for about $75,000 to $90,000 per unit in the Raleigh, N.C. market compared to the $44,000 Polo Run Apartments brought, he says.