TODAY’S DEALS: Newcastle Buys 48-unit Property in Chicago

April 20, 2011

Newcastle Limited acquires a 48-unit building in Chicago's Lincoln Park; SilverLeaf purchases non-performing loans secured by a golf course, raw land, lots and multi-housing; and Behringer Harvard invests in The Domain at Eldridge in Houston.

2727 North Pine Grove

Chicago—Newcastle Limited has acquired a 48-unit building in Chicago’s Lincoln Park neighborhood for $5.9 million. The property, 2727 North Pine Grove, was purchased through Newcaslte’s $500 million Chicago real estate investment platform. Jack Cassin and Bill Cassin of Apartment Investment Advisers represented Newcastle in the transaction.

“The property’s sought-after location made it an excellent investment opportunity and a great addition to our growing portfolio,” says Michael Haney, president and CEO of Newcastle Limited. “Our ability to close this acquisition quickly on an all-cash basis was a compelling factor for the seller.

2727 North Pine Grove is located on a quiet residential street and has a mix of studio and one-bedroom units. Newcastle plans to upgrade the units/common areas and improve curb appeal over the next 24 months.

SilverLeaf purchases non-performinglloans secured by golf course, raw land, lots and multi-housing

Flagstaff, Ariz.– SilverLeaf Financial acquired a non-performing loan secured by a private golf course and resort called “Pine Canyon” in Flagstaff, Ariz. Located near the southwestern edge of the Colorado Plateau, the private mountain retreat is known as “The upscale golf community of choice” in Northern Arizona.

Included in the loan’s collateral are several new multi-million dollar estate homes, townhomes, condos, improved lots and raw land. SilverLeaf’s CEO, Shane Baldwin says, “It’s a unique asset class, not one we would normally buy on a one-off basis. But because it was part of a pool of loans we acquired, we felt that our risk was diversified.”

Both the golf course and community have been branded with numerous awards, such as “Best in the West” Gold Nugget Award for best Public/Private Recreational Facility; “#4 Best Club In Arizona” by Golf Digest; “Top 25 Best New Courses,” “Best Residential Course” by Golf Week; and “Clubhouse of the Year” by Golf Inc. Magazine.

SilverLeaf Financial purchased the Pine Canyon loan along with eight other distressed commercial real estate (CRE) loans from the same financial institution in March. The activity in the distressed sales sector is continuing to increase quarter over quarter, with the majority of these assets yet to work through the system and come to market.

Of the $1.4 trillion balance of outstanding commercial/multifamily mortgages held by non-bank investors, only 11 percent of the total ($155 billion) will mature in 2011 and 9 percent ($125 billion) in 2012 according to the release of the Mortgage Bankers Association’s (MBA) 2010 Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes. The survey found that maturities vary considerably by the type of investor holding the loan. These maturities should create more distressed opportunities in 2011 and the years to come.

Behringer Harvard invests in Houston development

Houston—Behringer Harvard has invested in The Domain at Eldridge, a 320-unit to-be-built project in Houston’s Energy Corridor. The firm has provided mezzanine financing for construction of the property, which will being this spring. The Domain at Eldridge is expected to have its first units available for lease in spring 2012.

The Domain at Eldridge is incorporating many factors that have been a proven success at Eclipse, the neighboring apartment community that is fully stabilized,” says Mark T. Alfieri, chief operating officer of Behringer Harvard Multifamily REIT I Inc. “These success factors include a developer with an outstanding multifamily track record, luxurious amenities that exceed those offered by most competitive options, a limited supply of new construction in the submarket and a desirable location favored by affluent young professions.”

Simmons Vedder Partners is developing the property. Financing for the construction was provided by JPMorgan Chase. The three-story structure will include two resort-style courtyards, club room, swimming pool, screening room, fitness center, conference room and business center. Units are expected to average 970 square feet.