Written by David Bracken | TRIANGLE NEWS & OBSERVER
Chicago investment firm Waterton Associates has bought The Exchange at Brier Creek apartments for $28.3 million, the latest sign of institutional investors' strong appetite for multi family properties in the Triangle.
The seller was Flaherty & Collins Properties, an Indianapolis company that expanded into the Southeast during the boom years but has since run into trouble.
Brier Creek FC, the entity Flaherty & Collins created to build The Exchange, filed for Chapter 11 bankruptcy in April. The company borrowed $24.26 million from J.P. Morgan Chase in 2006 to build the 274-unit complex, according to Wake County property records.
Waterton bought the debt at a discount and negotiated a resolution with the borrower to dismiss the case from bankruptcy, said Max Peek, Waterton's vice president of acquisitions for the eastern half of the country.
Buying the debt on a distressed property has become an increasingly popular strategy for some real estate investors. For banks that have no interest in owning real estate, investors such as Waterton offer a way to get a property off their books.
"We've been able to move very quickly for these banks, and we can give them a very clean execution," Peek said.
Apartment buildings have been about the only Triangle commercial real estate assets changing hands over the last year. That's largely because Freddie Mac and Fannie Mae, two government-sponsored entities, continue to finance apartment deals.
Demand has been particularly strong for newer Class A properties in good locations.
So far this year 14 Triangle apartment communities have sold for $237 million, according to Raleigh estate company Apartment REP. Last year, $250 million in apartment transactions were completed.
Flaherty & Collins was also the developer behind 210 Trade, a planned 50-story condo tower in Charlotte. Construction on that project stalled in early 2008, and Flaherty & Collins later filed for bankruptcy and liquidated the assets associated with the project.
Privately held Waterton owns and manages more than 16,000 apartments in 15 markets spread across 13 states. It also owns the Pinnacle Ridge Apartments in Durham.
The Exchange was 95 percent occupied in March, according to the Triangle Apartment Association and Karnes Research.
The price Waterton paid, about $103,000 per unit, is on par with what the nearby Ashley Park at Brier Creek apartments fetched last year.