Winthrop Picks Up Luxury Condos for $246M

BOSTON-Winthrop Realty Trust said Tuesday it had agreed to acquire four luxury apartment buildings across the US for a total of $246 million. Located on the East and West coasts as well as the Southwest, the four properties were developed prior down to the downturn and came to market following foreclosure by the original lender.

Real Estate Alert reported that Boston-based Winthrop and Miami-based Crescent Heights won the bidding for an FDIC-controlled portfolio that also will see Crescent acquiring another nine properties for approximately $650 million. The FDIC took over the lending and asset portfolios of Corus Bank, the original lender, after the Office of the Comptroller and Currency closed the bank's doors in 2009.

Winthrop's share of the portfolio involves 761 apartment units, all originally developed as condominiums. “We like the optionality created by the opportunity to acquire a cash-flow- positive portfolio of high quality, condo-constructed multifamily assets at what we believe to be well below replacement cost,” says Michael Ashner, Winthrop's chairman and CEO.

Largest of the four Winthrop properties is Mosaic II, a 29-story tower in Houston comprised of 396 units and 20,065 square feet of ground-level retail space. It was completed in '09, a year after the second largest of the four, 44 Monroe in Phoenix, a 34-story property comprised of 184 units and 1,377 square feet of ground-level retail.

The portfolio also includes Highgrove, an 18-story, 92-unit apartment building in Stamford, CT; and San Pedro Lofts, located in San Pedro, California and comprised of 89 units in two distinct residential buildings. All four have remained essentially vacant since their completion, according to Real Estate Alert.

Winthrop expects to close on the properties in September or October, subject to customary closing conditions. The REIT expects to secure $150 million of interest-only mortgage financing at Libor plus 200 basis points LIBOR plus 200 basis points, with a term of three years with two one-year extensions.