Goldstar Takes Condo Flats for $13M

CHARLOTTESVILLE, VA-The Goldstar Group has acquired 265 units in a 364-unit rental condominium flats-and-townhome project here called Barracks West. It acquired the complex out of receivership for $13.3 million, or $50,000 per unit, in an off-market short sale. The property was placed in receivership by Suntrust Bank late last year after the previous owner defaulted on a $22-million loan. Goldstar plans to invest $4.5 million in capital improvements and position the units as rentals.

Goldstar funded the acquisition via its affiliate Metropolis Capital Finance, which sourced the debt capital for the transaction. The acquisition included approximately $15 million of senior and mezzanine debt with the balance of the capital stack funded with equity.

This is the fifth fractured condo deal Goldstar has closed in the past three years. One of its more notable deals was its acquisition of a $40 million mortgage on 86 unsold units at Floridian Condominiums for $22.6 million in January of 2010. Since then, it has since sold all but three of the units. Goldstar paid $7 million for the remaining 65 units at Rosewood Condominiums in Gaithersburg, MD in the wake of Lehman Brothers’ bankruptcy.

Then there is its latest deal in Charlottesville. Originally developed in 1969, Barracks West comprises 34 buildings on over 19 acres. The property was acquired by Cheetah Investments LLC of Charlottesville from AIMCO in 2006 for $31.6 million, or $87,000 per unit. In 2007, Cheetah began converting the community to condominium ownership, and sold 99 units at an average price of about $130,000. Then the market crashed.

Goldstar’s sweet spot is value-add but over the past three or four years it has developed a special fondness for the fractured condo space, CEO Michael Brodsky tells GlobeSt.com. “The opportunity in Charlottesville gave us both of those options.”

The property became neglected when the market crashed and the seller realized the asset was no longer worth the debt, he explains: “Unfortunately the asset fell into disrepair, which was an opportunity for us.” Brodsky says the company plans to bring it up to B standards. It will be a long-term hold for Goldstar, with a possible refinancing in its future. “We like the market and would like to do more deals here.”