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Marathon Purchases Distressed Debt for Retail Center

As part of Marathon Asset Management’s focus on commercial real estate related debt opportunities, the credit asset management company closed a new investment to acquire a distressed retail center.

Marathon Asset Management, a corporate, structured, and real estate credit investment manager based in New York, purchased the East Village Shopping Center in Roswell, Ga.

The acquisition involved the purchase of a distressed senior mortgage and simultaneous transfer of ownership through a prenegotiated deed in lieu of foreclosure. Marathon secured new mortgage financing for the investment, which was used to implement the acquisition of the distressed loan.

“The East Village investment is another example of Marathon creating an opportunity out of a distressed situation by leveraging its expertise as both a lender and principal investor,” said Scott Schwartz, co-head of Marathon Real Estate. “The commercial real estate investments that we completed in 2010 as a part of our Real Estate Lending and Distressed Debt Program demonstrate our continued ability to identify, negotiate, structure and execute complex, off-market transactions arising from dislocation and distress in the U.S. commercial real estate debt markets.”

The East Village is the premier “power center” in a high-density, affluent Atlanta suburb. The property, which was built in 2008, includes 83,319 square feet of existing retail space, plus 112,296 square feet of planned development for which much of the infrastructure, planning and predevelopment work has been completed.

Marathon worked with the former borrower Concordia Properties to close the transaction. Concordia will remain the property manager and developer of the shopping center.

Synergy Resolution Services, an Atlanta-based real estate asset manager, co-invested with Marathon in the purchase. Synergy will be responsible for overseeing and implementing on-the-ground business for the property.

“In working with Marathon on this transaction, the borrower had an opportunity to resolve its legacy loan issues and take part in the future success of the property,” said Ron Bernstein, co-head of Marathon Real Estate. “Notwithstanding solid execution by a highly reputable local developer, depressed market conditions resulted in an overleveraged situation. Marathon’s investment provides the needed capital to put a well-conceived project back on the right track, with a cost basis right-sized to complete the limited remaining development and leasing at today’s reset market rates.”