Keys Buys Last 87 Units in Beachfront Project

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GULF SHORES, AL-A private buyer from Oregon has snagged 87 units from the recently completed 142-unit San Carlos Condominiums. The new owner plans to sell or lease the entire collection, which has been picked up for less than the $47.25-million ask.

Located at 365 E. Beach Blvd., San Carlos Condominiums were developed by Holiday Development LLC, a partnership of local developers. Holiday Development has sold the condo block to Robert Keys of the Portland, OR-based Private Consulting Group after closing 55 piecemeal sales to private buyers. Holiday’s problem in selling the balance of the 19-story project had been widely publicized by local newspapers after its completion last year, with the blame attributed to coastal communities’ slow recovery in the post-Katrina era.

Canyon Capital Realty Advisors of Beverly Hills, CA has provided a $32-million senior bridge loan to help finance the acquisition. The financial institution’s director, Michael Fleischer points out that the new owner will receive a variety of benefits with the acquisition.

“This is a market with limited hotel capacity,” Fleischer tells GlobeSt.com. “The market is good and is developing rapidly improving destination-type amenities.” He point out that the building is new so it’s been built to improved building code standards that went into play following Hurricane Katrina.

The condos are eligible for Gulf Opportunity Zone tax benefits. The zone is a tax district allowing qualified buyers to depreciate 100% of the purchase price against ordinary income over a three-year period as long as the unit hasn’t been put into service. “My sense is Bob will elect to sell the units, but could hold onto some,” Fleischer says. “He hasn’t determined that or price points yet, though.”

Fleischer explains a short-term loan was needed because of the tower’s vacancy. “This asset doesn’t lend itself to a permanent loan until it’s leased up or sold and has demonstrated some kind of cash flow,” he says. “This was an add-on to a construction loan that gave the borrowers an opportunity to either sell it or lease it up.” He declined to discuss loan details.

In a press release, Canyon Capital’s principal Jonathan Roth says the San Carlos Condominium deal is the first one with the borrower. “We’re relying on the Keys group to own and manage this well,” he says. “We felt comfortable making the loan based on the strength of their holdings and reputation.”

San Carlos Condominiums have two- and three-bedroom units and four-bedroom penthouses. Units go from 1,229 sf to 2,154 sf.