IRVINE, CA-An apartment investment company that built up a considerable portfolio during the halcyon days of the capital markets is now seeing its fortunes crumble as the financial industry tanks. Bethany Holdings Group, a locally based umbrella firm that specialized primarily in value-add multifamily plays, is now seeing the bulk of its residential property portfolio dispersed to a handful of distressed receiverships.

Bethany invested in its first property in 2004. Over the next several years, the hyper-liquid financing environment allowed the firm to snap up some rather large portfolios. In 2006, the company got a $159-million loan from GE Real Estate to buy and renovate a 2,873-unit portfolio of properties in Florida, Texas and South Carolina it acquired from Aimco, an apartment REIT. The following year, Bethany was able to reduce its capital costs and replace that floating-rate debt with another GE Real Estate loan—this time for $156.5 million. That five-year, fixed-rate, interest-only debt included a $130.5-million CMBS A-note and a $26-million mezzanine note that GE held on its own books.

Also in 2007, Bethany set records in Arizona when it shelled out $427.5 million to Greater Phoenix Bascom Arizona Ventures LLC for a 12-property, 5,178-unit portfolio. The firm planned to spend another $50 million in upgrades to the communities over the next couple of years. At the time, the package was about 91% occupied. Bethany funded that purchase with a kick-in from a private equity investor, as well as 90% financing from Lehman Brothers and a 20% mezzanine piece.

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