Sold!
In January, a private equity firm acquired three Bethany Group multifamily portfolios out of Chapter 11. The firm—identified only in court documents as Standard Austin Fund—will pick up some 5,000 units across 16 properties in Texas and Maryland for $400 million. Essentially a sale of the original equity stake to Standard Austin, the deal removes the embattled Irvine, Calif.-based Bethany Group from any association with its former Maryland, Austin, and Lonestar (Houston) portfolios, although Bethany still retains ownership of certain Maryland properties not in the Maryland portfolio. Other Bethany assets may soon transfer to new owners as well. San Diego-based Trigild received more than 50 offers on the so-called Kingdom One portfolio, a collection of Phoenix assets that has yet to receive court approval for disposition. Trigild, which was appointed receiver of 13 Bethany assets, including a portion of the Kingdom One portfolio and its Colorado portfolio, has a court hearing in Florida this month where they will ask a judge to approve a sale. —Chris Wood
No Surprise
After San Diego-based Fairfield Residential, the nation’s 13th largest apartment owner, according to MFE’s 2009 list of Top 50 Owners, filed for Chapter 11 bankruptcy protection in December, experts said the filing was long expected. Despite the news, the industry can expect an orderly bankruptcy process without a firesale of assets. Fairfield had been renegotiating with its lenders for more than a year, but eventually it collapsed under the weight of purchases from 2004 to 2007. Many of those deals turned upside down, leaving the company in violation of covenants with Wells Fargo (which made the loans through Wachovia Corp.) and Capmark Corp. Like many troubled owners, it was bad buys that did Fairfield in. Real Capital Analytics reported that since 2001, the firm made acquisitions of $6.1 billion and dispositions of $8.8 billion, mostly in troubled markets such as Phoenix. Fairfield reacted proactively to the filing. On its Web site, the company announced that it has every intention of emerging by “creating a stronger go-forward operating platform and continuing to be an active player in the multifamily sector.” —Les Shaver
Debt Costs Rise
Throughout 2009, multifamily borrowers enjoyed sub-6 percent rates from Fannie Mae and Freddie Mac, as other commercial real estate sectors struggled to find well-priced debt. But if current trends hold up, those rates may be tough to find in 2010. The government-sponsored enterprises (GSEs), which offered 10-year fixed-rate loans in the mid-5 percent range throughout most of 2009, are now pricing loans at about 6 percent. The increase is due to the yield on the benchmark 10-year Treasury, which has risen roughly 60 basis points since the end of November, from3.2 percent to 3.8 percent today. While the transaction market continues to be sluggish, the rate increase could further stall the market’s recovery. “With each rate increase, deals stop working on the acquisition side,” says Byron Steenerson, president of Seattle-based Fannie Mae lender Alliant Capital. “And the amount of borrowers choosing to refinance goes down because it becomes less appealing.” —Jerry Ascierto
Turnaround Man
Minnetonka, Minn.-based Opus Corp. has hired corporate turnaround specialist Tim Becker (inset) of Maplewood, Minn.-based Lighthouse Management Group as its new CEO. Becker replaces Mark Rauenhorst, who left the Opus CEO post in fall 2009 as part of a change in the organizational structure at the Opus companies to strengthen operations at the remaining Opus North and Opus Northwest divisions. Opus confirmed the hiring of Becker with MFE but said that further details of the Opus restructuring/recovery plan would not be available for several weeks. Becker was unavailable for comment. Options, however, may be limited for Opus. The Opus Northwest division recently announced it would lay off an additional 13 persons from its Portland, Ore., and Seattle offices, signaling tough times ahead. —Chris Wood
