(Read more on the debt and equity markets and the multifamily market .)
IRVINE, CA-Atherton-Newport Investments, which controls approximately 5,000 units of multifamily property in Las Vegas, Phoenix, Seattle and South Florida, filed a voluntary Chapter 11 bankruptcy petition this week after problems meeting its debt service. The Irvine-based company issued a statement saying that the filing "was necessitated by the actions of one of ANI's creditors," who include about 200 note-holders that invested about $40 million in ANI.
Atherton-Newport referred questions regarding the Chapter 11 filling to its attorney, Joseph A. Eisenberg of Jeffer, Mangels, Butler & Marmaro in Century City, who tells GlobeSt.com that after ANI "became illiquid and unable to service its debt," some of the note-holders began collection efforts that prompted the bankruptcy filing. As Eisenberg explains, Atherton-Newport initiated the filing "to ensure that all of the note-holders were treated equally and fairly" and so that "nobody would leap to the front of the line by litigating aggressively" to collect on the debt.
ANI, which was founded in 2001, is a holding company that funded its operations by borrowing money on an unsecured basis from the approximately 200 note-holders. Each of the properties that it controls is owned by a separate single-purpose entity, none of which are debtors in the bankruptcy, Eisenberg points out.
The ANI Chapter 11 petition, filed with the Santa Ana Division of the US Bankruptcy Court's Central District of California, lists assets in the range of $10 million to $50 million and liabilities within the same range. According to the filing, the claims of the 20 largest unsecured note-holders amount to approximately $15 million.
ANI expects to continue to operate normally throughout the Chapter 11 process, the company said in its statement regarding the bankruptcy filing. It said the Chapter 11 process will enable it to "develop a comprehensive restructuring of all of its legal and financial affairs."
The bankruptcy filing comes approximately a year after Atherton-Newport co-founder Ashish K. Khatana, in an interview with GlobeSt.com, said that the firm planned to invest in and develop $600 million of property during 2007, with plans to take its operations global in 2008. Khatana told GlobeSt.com that the company was funded through a combination of its own capital, high-net-worth individuals and institutional investors, and that it had invested $425 million in 2006 after $190 million of investment in 2005.
Khatana told GlobeSt.com that ANI's business plan aims at generating value through capital improvements that in turn support rent increases, and that the company's typical hold period is about four years. According to the company's web site, Atherton-Newport had acquired 41 multifamily properties and sold 26 of the 41 properties as of July 31 last year, resulting in 50% gross and 37.2% net annualized returns to investors. The company was founded by Khatana and Roger E. Fiola, who are listed as co-managing members of the firm on the bankruptcy filing.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
