"These were built as rentals in 2004 and 2005, then a developer bought them after the fact to convert them to condos. After he went through the process, he sold 16 of the 248 units. He started renting them out, but the bank took over the property right before the hurricane (Ike) hit," explains Kitty Wallace, senior vice president with Sperry Van Ness' Los Angeles office. Wallace brokered the transaction between buyer Marquette Cos. and LaSalle Bank, which had foreclosed on the units and 15 acres at 3433 Cove View Blvd. last fall.
Wallace tells GlobeSt.com Hurricane Ike made obtaining financing somewhat difficult, though the complex sustained very minimal damage. She says the buyer went through 11 different lenders, including Freddie Mac, until a Galveston-based lender stepped forward with the funds. Wallace says despite all the delays, the closing happened two weeks ahead of schedule.
"(The buyers) were tenacious about sticking with this project, otherwise it never would have happened," Wallace says. She adds that 17 bidders were interested in Club of the Isle, and the fact Marquette Cos. already owns some 1,000 acres on Galveston Island gave it the edge in bidding for the asset. "They're not making any major upgrades, but they do have some capital money for maintenance and repair work," she explains.
The complex is being run as a rental and is currently close to 80% occupied. The unit mix consists of ones, twos and threes, measuring between 713 square feet and 1,570 square feet. Current rents are from $765 to $1,395 per unit.
"This was a nice complex that they had," Wallace says. "It's unfortunate that the market didn't cooperate."
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