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DETROIT-A partnership between GFI Realty Services Inc., based in New York City, and Greenwich, CT-based Square Mile Capital has purchased four apartment properties in the metro area from GE and a Belleville, MI property for about $95 million from Archon. Altogether the purchase was for 2,500 units. The four-parcel portfolio includes complexes in Southfield, Oak Park and Royal Oak.

The properties include Whitehall and Charterhouse complexes in Southfield, Northwood in Royal Oak, the former Detroit Harbour Club in Belleville and Bridgewater in Oak Park. The partnership acquired 85% financing for the property and another $10 million for planned renovations and upgrades, according to Michael Weiser, executive vice president at GFI. “We’re going to be doing deferred maintenance, roof repair, new lighting, whatever is appropriate to the specific property,” he says, as well as taking over management of the sites.

However, the company will not be improving Northwood, as it already has a signed letter of intent with a local investor for the 121-unit property. “We generally don’t like to hold properties that are under 200 to 250 units,” Weiser tells GlobeSt.com. “We self-manage, we have to set up operations at each property, we find that under 200 units is just not profitable. We do that all over, we’re right now trying to unload six Houston properties that are not more than 200 units.”

The largest parcel is the Belleville property, at 1,145 units, is also the most prestigious, with a nine-hole golf course and a marina. However, the company bought the properties because they are value-add, Weiser says. “Most of the properties, there’s not a lot going on,” he says, with occupancy rates ranging from 78% to 91%. “We feel it can turn around, you have properties change hands, put some work into them, the tenants see that, it gives the property a fresh start.”

Also, though he says he has not toured the Michigan properties himself, he believes the state will make a comeback. “The Detroit market has tremendous potential,” Weiser says. “Besides, when it’s all said and done, we’ve invested about $40,000 a door on average, including the renovation. We don’t buy class A properties as a guideline, you can lose too much. The rents on A’s will come down, you take a class A property renting at $1,500 and have to drop that rent, a 20% drop can kill you. The class B properties won’t come down that much.” Besides, he says multifamily property is on its way back, especially with all the worries about subprime mortgages. “As part of our strategy, we’re looking to acquire 15,000 additional units in the next 12 months,” Weiser says.

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