UDR to Acquire 507-Unit Dwell95 for $325M

UDR Inc. plans to acquire a condo-quality community in Manhattan's Financial District for $325 million; Marcus & Millichap lists a 2.86-acre development site in El Monte, Calif., for $7.5 million; and George Smith Partners completes a $9.5 million bank loan for a discounted payoff purchase.

Wall Street - Courtesy Flickr user Lucas Garcia

New York—UDR Inc. has entered into a definitive agreement with the Moinian Group to purchase Dwell95, a 507-unit luxury apartment property located at 95 Wall St.—the former home of JP Morgan’s corporate headquarters. The company plans to fund the $325 purchase price by issuing $50 million of operating partnership units and $275 million in cash that will be partially funded through proceeds from property dispositions. UDR expects the deal to close before August 31, 2011.

“We see significant value creation opportunities through the implementation of our operating platform as the building is still pre-stabilized following the complete renovation in 2008,” says Tom Toomey, president and chief executive officer of UDR. “Dwell95 provides a unique opportunity to further our presence in the Financial District, an area of Manhattan that we believe will continue to benefit from the redevelopment of the World Trade Center and surrounding area.”

Dwell95 is the second apartment conversion that UDR has acquired in the Financial District in the last year. In March the company purchased 10 Hanover Square, a 493-unit property that was the former headquarters of both Goldman Sachs and Kidder Peabody prior to a 2005 renovation.

The 22-story Dwell95 was converted to residential space in 2008. The property features condo-quality interior finishes in a mix of studio, one- and two-bedroom units that average 668 square feet each. Amenities include a 24-hour doorman and concierge service, fitness center, resident lounge, rooftop deck, and on-site parking. Dwell95 is currently 93 percent occupied. Apartment rents average $3,100 per month.

Marcus & Millichap list Calif. urban infill development site

El Monte Development Rendering

El Monte, Calif.—Marcus & Millichap has listed a 124,966 square-foot, 2.86-acre development site in El Monte, Calif., for $7,500,000. The site currently has two apartment buildings that were built in 1963, commercial uses and a single-family residence. The space is 60 percent vacant and generates $175,000 annually.

“A savvy investor or developer has the opportunity to transform this land into a mixed-use project with multiple uses, or a quality affordable housing project,” says Daniel Withers, who shares the exclusive marketing rights along with Lonnie McDermott. Both are investment specialists at Marcus & Millichap’s Encino office.

“The City of El Monte has identified an absolute need for new multifamily housing development as well as retail designed to serve this urban corridor,” McDermott says. “As a result of the city’s pro-development stance, it will work diligently with any investor or developer to make an innovative urban infill project come to fruition.”

George Smith Partners completes $9.5M bank loan for discounted payoff purchase

Los Angeles — George Smith Partners has successfully arranged $9.5 million in financing for the acquisition of a multifamily property in a secondary market in Northern California, according to Principal and Managing Director Gary E. Mozer.

Mozer was assisted by George Smith Partners Senior Vice President Josh Roseman and Vice President Michelle Lee.

The $9.5 million loan was used to finance the discounted pay-off on a 96-unit broken condominium project. The floating rate loan closed with an interest rate of LIBOR plus 2.5 percent for three years with two one-year options. The loan was then swapped to three-year fixed at 3.76 percent.

“The property historically operated at above 95 percent occupancy as an apartment complex. During the condo conversion, cash flow suffered and the conversion stalled in mid-2010, ultimately causing our client to decide to convert the property back to apartments,” Mozer explains. “This loan provided various challenges for our client, including that the in-place net operating income did not justify the required loan amount. In addition, the prior operator was a condo converter, not experienced in managing rental units. Lastly, the lender required that the discounted pay-off close by a fixed date, putting pressure on our client to close the loan in a timely manner.”

“Once the client brought in a new management company, we were then able to analyze the historical operating expenses to cull-out non-recurring and capital expenditures that were attributable to the prior operator’s focus on condo sales rather than traditional multifamily operations,” Lee explains.

“Given the hard close date required by the lender, we recommended the client borrow from a regional bank with proven execution ability. We then worked with the lender to explain all the historical variances and were able to close the transaction on-time and as applied for.”