This property was a severely “broken” condominium project with owner-occupants in only 3 units out of 240. We were able to purchase over 80% of the units at favorable prices and took over the condominium board and instituted a property-wide common area upgrade. We also renovated 48 units and achieved a 15%+ return on renovation costs. The property was sold in June 2017 and generated an IRR of 27% to investors.
In an extremely complicated transaction, we purchased the defaulted second mortgage on a failed condo conversion of 719 units. Using that position as leverage, we were able to gain control of the manager of the entity that owned 64% of the units. We then purchased enough units to obtain ownership rights to 75%+ of the units which allowed us to “deconvert” the property, subject to a “Section 15” deconversion of the IL Condo Act.
In April 2018, we purchased 209 condominium units out of 235 total units (89%). By June 2018 we gained ownership of the remaining 26 units and continue our program of common area improvements, including repairing or upgrading the parking lot, landscaping and certain common areas.
This is the only transaction to date in which all of the units were acquired at the same time subject to a 100% deconversion vote. This property will be moderately renovated and held for cash flow and accommodated a section 1031 tax deferred exchange.
In October 2018 we purchased 147 units out of 264 units in a single bulk acquisition. To date we now own 60% of the units. As members of the board we are trying to remediate years of deferred maintenance in order to improve the overall property. We have begun a select upgrade of units that we own and are achieving rent premiums in excess of our projected rents.