Commercial real estate service firm Newmark Grubb Knight Frank closed the sale of Park Terrace Apartments for $3.4 million on behalf of the seller City National Bank.
This deal marked the third sale NGKF has completed for the bank over the past year.
The 216-unit multifamily complex is a Class C complex located just outside of Philadelphia. John Dunning, a director with Los Angeles-based NGKF Capital Group, said the proximity to Philadelphia, where apartment vacancies are low and multifamily properties trade at higher prices, created the potential renter demand that made the deal work for the undisclosed private investor who purchased the asset.
“Even though this asset was highly distressed, our analysis showed investors the potential for a 9% annual return in the first year with repairs and some basic repositioning,” said John Dunning, a director with Los Angeles-based NGKF Capital Group.
However, NGKF said there were challenges in marketing Park Terrace Apartments for sale, which City National Bank acquired as an FDIC loss share asset after buying the failed Imperial Capital Bank.
The previous loan was $6.15 million or $28,472 per unit. But after lengthy bankruptcy proceedings and eventual foreclosure left the property in disrepair with mold and water problems to 91 units as well as damaged units from a small fire, the complex needed approximately $3.75 million in improvements.
According to City National Bank, an apartment unit now brings back $15,740 for a client.
Previous deals that NGKF has handled for City National Bank include two Atlanta properties: Hidden Pines Apartments, a distressed 170-unti complex, and the sale of the 64-unit Arcadia Downs Apartments.
Currently, the firm is marketing the Houston complex Tanglewood Apartments for CIty National Bank.
