(Save the date: RealShare Apartments comes to the Westin Bonaventure, Los Angeles, October 24.)
SAN RAFAEL, CA-Those who follow @GlobeStcom on Twitter may have seen a post teasing the announcement a few days ago, but GlobeSt.com has learned that the Praedium Group and Los Angeles-based Empire USA LLC have purchased the newly constructed 82-unit 33 North out of bankruptcy as a substantial discount to replacement cost. The purchase price was $36.4 million.
David Dowell, director at New York City’s Praedium Group and head of acquisitions for Praedium’s Midwest and Pacific Northwest regions, tells GlobeSt.com that the property was designed and developed by Monahan Pacific, a San Francisco-based real estate developer for approximately $60 million. Construction started in 2008 and was completed in 2012.
According to Dowell, the developer intended to sell it as condominiums and financed it with a construction loan from Pacific National Bank, which subsequently was taken over by the FDIC. The note was then inherited by US Bank, he explains.
“The issues with the lender along with the economic downturn caused construction to halt just prior to completion, at which point Monahan Pacific defaulted on their loan,” Dowell tells GlobeSt.com. “Attempts to recapitalize and work out the deal failed, and the borrower filed for chapter 11 bankruptcy protection in December of 2011.”
The desirable location and high-end features and finishes is what makes the asset attractive, Dowell says. “Our ability to purchase the asset at a considerable discount to replacement cost presented a great investment opportunity in a market that boasts extremely low vacancy rates and a lack of available entitled land.”
According to Steven Hartunian, principal of Empire USA, his firm’s strategy on this property is to lease the units to “take advantage of the lack of rental supply, favorable demographics and the diverse employment base which we expect will drive Bay Area fundamentals in the years to come.”
33 North is one of only a handful of new properties constructed in the Marin County submarket of San Francisco during the past two decades, according to a prepared statement. The condominium-quality finishes, including gourmet kitchens with custom European cabinetry, Caesarstone countertops, glass backsplashes, premium flooring and Bosch appliances, full size washer/dryers and large outdoor spaces, only further its position as the highest quality asset in the area. The property is located directly off US Route 101, and is only 15 miles from Downtown San Francisco.
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