PHOENIX-The Arizona Superior Court ruled that a portfolio of seven apartment complexes in Arizona can be sold while in receivership. The 2,759-unit portfolio, which was purchased by The Bethany Group about five years ago, is now in escrow to Standard Portfolio, a real estate investment company, for $123 million.
The portfolio includes the 460-unit Laguna Village; the 320-unit Alante at the Islands and the 374-unit Santana Crossing in Chandler, AZ; the 432-unit Whispering Meadows and the 582-unit Tuscany Palm in Mesa, AZ; the 395-unit Sienna Springs in Phoenix; and the 196-unit Verrado Park in Glendale, AZ.
The Bethany Group, an Irvine, CA-based real estate and investment firm, bought the properties as a portfolio and obtained a single loan for all seven communities. It abandoned the class A properties in spring 2009. The desertion resulted in deferred maintenance, unpaid employees and suppliers and many concerned residents who suffered through moldy pools and no garbage service. In March 2009, San Diego, CA-based receivership and loan recovery specialist Trigild was appointed receiver of the Arizona properties, as well as six other properties throughout the country.
“The properties were definitely neglected and had received a lot of bad press,” says Trigild president Bill Hoffman. As receiver, Trigild’s addressed restored order by addressing maintenance and repairs and ensuring efficient operations. The firm improved occupancy and revenues, as well.
Hoffman tells GlobeSt. the properties garnered a huge amount of interest and generated roughly 60 offers. “The assumable financing made all the difference,” he says, pointing out that the special servicer would not have been able to offer assumable financing if the court had not allowed the properties to sell while in receivership instead of waiting for foreclosure. “The availability of financing for this sale allows us to deliver a much better recovery for the lender, in this case more than $53 million above the best 'all cash' price."
Many states require lenders to foreclose on properties before selling them. However, some states, and the federal courts, already provide for such receiver sales, but often only if the borrower does not object.
Arizona had no specific rules allowing or forbidding, and Hoffman argued, over strenuous objection by borrower's counsel, that the court could exercise its equitable powers to do what was most beneficial for all parties.
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