Lynd Residential partner and director of acquisitions Richard Singleton says he had his eye on the renovated asset at 3616 Richmond Ave. since developer Cambridge Development Group, with help from Apartment Realty Advisors' Houston office, brought it to market during late winter 2008. Between that time and fall 2009, Singleton says, the asset ended up under contract, and fell out of escrow, several times.
During that time, the market tanked. Furthermore, "the loan matured in September 2008, but there were some extensions," Singleton tells GlobeSt.com. "At first, there was a maturity default, but ultimately Cambridge wasn't able to refinance the loan, and it became a financial default." He goes on to say that KeyBank likely looked favorably on the joint venture as buyers because of familiarity with the asset and the fact "we'd engaged a lot with the KeyBank people on the loan side."
Cambridge Development, based in Houston, acquired and converted a vacant office tower into Metropole in 2005, investing upwards of $40 million during the process. The result of the conversion is a mid-rise/high-rise multifamily complex with structured parking. A call to Cambridge Development was not returned by deadline.
"The developers did a great job," Singleton comments. "This product is beautiful. But the rents just didn't justify the costs of the renovation." The average effective rent per square foot is $1.45, with the average unit size at 966 square feet.
The occupancy at losing was about 80%, and Singleton says the goal is to get the property leased up. "We'll probably have to drop rents a little on the units to get them leased up, but then we should attain equilibrium," he adds.
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