TODAY’S DEALS: Madison Realty Announces Sale of Condo Units for $24.5M

New York–Madison Realty Capital (MRC), an institutionally backed commercial real estate investment firm and asset manager specializing in flexible debt and equity financing solutions for middle-market transactions throughout the United States, announced the sale of 49 condominium units totaling 64,561 net sellable square feet and 43 parking spaces at a development in Sheepshead Bay, Brooklyn for $24.5 million, resulting in a significant return on MRC’s initial investment.

The sale was completed by a debtor in Chapter 11 bankruptcy pursuant to a plan of reorganization.  MRC was a secured creditor in the bankruptcy proceedings.

MRC took control of the Breakers at Sheepshead Bay project, located at 3112-3144 Emmons Avenue in Brooklyn, N.Y., in December 2012 through the acquisition of a non-performing loan, after the original lender had commenced foreclosure and the borrower had filed Chapter 11 bankruptcy proceedings.  The sale announced today brings MRC’s investment in the property to a successful conclusion, within 12 months of the original transaction.  Josh Zegen, Co-Founder and Managing Member of MRC, made the announcement.

“We’re particularly proud to announce the disposition of the Breakers at Sheepshead Bay property,” Zegen said.  “MRC had the opportunity in this complex deal to exercise every element of our fully integrated platform.  Our bankruptcy and restructuring expertise was at the forefront, given that we entered the deal after the borrower filed Chapter 11.  We navigated the challenges of acquiring the defaulted loan and then improving and renovating this property to maximize its value, all within the bankruptcy framework.  This sale, completed pursuant to a contested and confirmed Chapter 11 plan, is a testament to MRC’s ability to bring multi-dimensional real estate and financial expertise to bear on a troubled asset and successfully turn it around.”

Centerline provides $4.2M financing for acquisition and rehab

New York—Centerline Capital Group, a provider of real estate mortgage services for affordable and conventional multifamily housing, announced it has provided a conventional loan in the amount of $4.2 million to facilitate the acquisition and subsequent rehabilitation of a multifamily property located in Lawrenceville, Ga.

Tanglewood Heights Apartments is a 130-unit garden-style affordable housing community located on a 12.69-acre site that was built in 1995.  The property is comprised of 14 two- and three-story garden style residential buildings housing a mix of two and three bedrooms apartments. The loan represents both construction and permanent development financing, and the construction financing consists of 9 percent tax credits.

The borrower and developer is Tanglewood Heights Apartments LP, sponsored by Prestwick Development and Kenneth G. Blankenship.  Blankenship has experience in the local area and a strong understanding of multi-family development and financing.   To date, he and his partners have developed 12 properties containing 807 units and their experience includes the rehabilitation of properties similar in both scope of repair and financing structure to the subject.

“The property is well located approximately 23 miles northwest of Atlanta’s Central Business District and has served low and moderate-income families since it was built,” noted Jon Killough, Senior Vice President at Centerline Capital Group. “The Property is in good condition overall, but is in need of repairs to address limited deferred maintenance and the modernization of various physical components.”

“The new loan structure will allow for improvements that will enhance the overall condition and aesthetic appearance of the property,” added Philip Melton, Senior Managing Director at Centerline. “The planned improvements will result in the preservation of a valuable affordable housing resource in the market. And, since the property and neighborhood are well-suited for their intended occupancy, their long-term capacity to provide affordable housing for their residents will be greatly improved.”

The apartment community currently includes a leasing office, central laundry facility, and a playground and picnic area.  As part of the rehabilitation, which totals $6,851,006, or $52,700 per unit, the building housing the leasing office and laundry facility will be demolished.  In its place, a new clubhouse featuring a leasing office, fitness center, computer center and laundry area will be built. In addition, a swimming pool will be added as well as a new playground and picnic area with a pavilion.

“Centerline effectively structured this unique deal in a seamless and timely fashion,” noted borrower and developer Blankenship.  “This was a complex transaction that resulted in the preservation existing affordable housing, and required coordination with the Georgia Department of Community Affairs to combine HUD financing with new federal and state LIHTCs.  Centerline delivered on the loan and we are looking forward to improving the property so it can continue to provide much needed affordable housing in the market.  We hope to partner again with Centerline in the near future.”

“This was a good investment with a strong established sponsor in a solid local community for Centerline,” added Killough.

The Affordable Housing Debt group at Centerline provides mortgage financing for affordable multifamily properties throughout the United States. Centerline is a Fannie Mae DUS lender, Freddie Mac TAH lender, FHA-approved mortgage provider, bridge and CMBS lender, and source for other forms of alternative capital.