Buyers Guide: The Top 5 Multifamily Purchasers of the first half of 2010

Not all buyers are built the same. From traded and non-traded REITs to investment banks, private regional operators, and under-the-radar foreign investors, the top five apartment purchasers* of the first half of 2010 embrace different business models and acquisition strategies, but they are all looking to close out the year with a bang.

14 MIN READ

4. The Foreign Investor


Company: The Standard Portfolios
Headquarters: China
2010 first-half volume: $296 million across 16 properties
Portfolio size: Unknown, but at least 7,759 units
Markets of interest: Arizona, Maryland, Texas


Though it may seem difficult to be one of the top apartment purchasers in the United States during 2010 and still maintain a low profile concerning capital structure and portfolio operating and exit strategies, The Standard Portfolios has succeeded in doing so. The firm has kept itself under wraps by purchasing distressed assets via the courts or out of receivership and has generally eschewed media attention or any other semblance of basking in the buyer spotlight.

In January, the company successfully negotiated the purchase of a 16-property, 5,000-unit Bethany Group portfolio via bankruptcy court for $350 million and then quietly assumed operation of the properties, which are located in Maryland and Texas.

Standard closed on B-note purchases from New York-based BlackRock and Uniondale, N.Y.-based Arbor Commercial Mortgage before agreeing with senior lender Overland Park, Kan.-based Midland Loan Services PNC to lower the interest rate and extend the terms of the original loan, essentially amounting to a sale of the original equity stake to Standard, according to Bethany Group attorney Evan Smiley, a partner with the Costa Mesa, Calif.-based law firm Weiland, Golden, Smiley, Wang, Ekvall & Strok. “It is a purchase of the assets. The existing equity will all be cancelled: The Standard entity will own 100 percent of the equity of the portfolio, and the lenders have agreed to stay in the game,” says Smiley, who could not reveal information regarding Standard beyond what was available in court documents.

Although attorneys representing Standard from Houston-based law firm Pillsbury collected a 2010 Turnaround Atlas Award for Distressed Real Estate Deal of the Year from the New York-based Global M&A Network for the Bethany transaction, Standard declined to comment for this article via the law firm, and attorneys likewise cited client confidentiality when asked to comment generally on the firm’s multifamily portfolio and acquisition strategy. In a press release announcing the Atlas Award, Pillsbury described Standard as a Chinese investment group and noted that the Bethany portfolio marked Standard’s first entry into the U.S. commercial real estate market.

In August, Standard struck again at U.S. multifamily and once again structured the purchase of a Bethany Group portfolio, this time grabbing a 2,759-unit, seven-property Arizona portfolio out of receivership from San Diego-based Trigild for $123 million. According to Trigild president Bill Hoffman, Standard outbid significant buyer interest in the portfolio, which he characterizes as much improved following the Irvine, Calif.-based Bethany Group’s abandonment of the properties in March 2009. “We positioned the properties for a quick and profitable sale by improving the occupancy and revenues along with resident and community support,” Hoffman says. (A request for comment delivered to the company via Trigild received no response.)

As of press time, no other deals involving Standard have come to light in 2010 and further activity for the remainder of the year is unknown.

About the Author

Chris Wood

Chris Wood is a freelance writer and former editor of Multifamily Executive and sister publication ProSales.

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