Recovering SF rental market allows developers to capitalize on debt bought during the recession

Miami /
Jun.June 20, 2012 01:30 PM

South Florida investors who bought up debt on foreclosed multi-family properties during the recession are now beginning to cash in on the rental-biased recovery. But despite real estate deals that can be as sweet as 50 cents on the dollar, this kind of risky investment involves its share of challenges, according to the Wall Street Journal.

For example, Miami Beach’s Alton Pointe, a 119-unit, nine building apartment complex, was acquired by Ram Realty for $13.1 million during a bankruptcy proceeding in 2009. The complex’s developer at that time was the controversial Michael Stern, who had just received immunity for acting as an undercover informant in a bribery probe – last month Stern was indicted on the unrelated allegation that he scammed Indianapolis Colts football player Dwight Freeney. When the complex was foreclosed upon Stern attempted to retain control of the property by filing for bankruptcy. Eventually Ram won Alton Pointe at auction, but 2009’s struggling housing market and the buildings’ connection to Stern nearly caused Ram to abandon the deal. It was only after extensively reviewing bank documents and Miami’s housing market that Ram Chairman Peter Cummings decided to move forward with the project. “Everyone was down on Miami,” said Cummings. “We believed that Miami was one of the great gateway cities.”

By the time Ram made the official purchase about 10 of the building’s units had been converted to condos and sold by Stern and one unit was boarded up; the remaining units were only about 50 percent occupied. Ram had to preform major renovations on the units and add a pool. Since that time occupancy in Alton Pointe, which is located at 1965 Alton Road, has risen to approximately 96 percent. In April Ram sold the property to a limited liability company called Alton Pointe for $20.44 million, netting Ram close to a $5.9 million return on its total investment. [WSJ]


Related Articles

arrow_forward_ios
Invesca Development Group’s Bernard and Michael Hsiao with the development site at 4300-4400 Northwest Ninth Court in Plantation (Invesca, Google Maps)
Invesca scores $77M construction loan for Plantation rentals
Invesca scores $77M construction loan for Plantation rentals
From left: Isaac Toledano, Teddy Sagi, Jorge Pérez and Michael Masanoff with a rendering of Transit Village (Related, LinkedIn, Rendering via Arquitectonica)
Pérez and Sagi’s Transit Village in WPB advances
Pérez and Sagi’s Transit Village in WPB advances
MG Developer's Alirio Torrealba with 3191 Southwest 39th Avenue and 3160 Southwest 38th Court (LinkedIn, Google Maps)
MG completes Miami apartments dev site assemblage
MG completes Miami apartments dev site assemblage
Manor Broken Sound at 5400 Broken Sound Boulevard in Boca Raton, with Rockpoint’s Bill Walton, Related Group's Jon Paul Pérez and Jorge Pérez and Lincoln Property Company CEO Tim Byrne (Cushman & Wakefield, Rockpoint, Related Group, Wikipedia, Lincoln Property Group)
Lincoln Property pays $194M for newly built Boca apartments
Lincoln Property pays $194M for newly built Boca apartments
Metronomic's Kelly Beam with 3265 Bird Avenue (Metronomic Holdings, Google Maps)
Embattled developer’s Coconut Grove rentals head to auction
Embattled developer’s Coconut Grove rentals head to auction
Lissette Calderon with 2301 Northwest 33rd Avenue
Calderon pays $32M for dev site near Beckham soccer stadium
Calderon pays $32M for dev site near Beckham soccer stadium
Grant Cardone (Photo courtesy of Cardone)
How Grant Cardone built a real estate empire with other people’s money
How Grant Cardone built a real estate empire with other people’s money
Starwood Capital Group's Barry Sternlicht and Villas at the Cove Crossing at 2738 Lantana Road and 2735 Donnelly Drive in Lantana (Getty Images, Google Maps)
Sternlicht’s Starwood makes Lantana affordable housing play
Sternlicht’s Starwood makes Lantana affordable housing play
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...