NEW YORK, NY - A New York-based company claiming to be one of Alabama's largest landlords has run into trouble with a $138 million local apartment portfolio it purchased in mid-2006. Brooklyn-based Collins Group LLC, which has said it has about $500 million in assets in the state, purchased six apartment communities in Homewood and Hoover in 2006. The deal has taken a downward turn, with Collins' senior lenders in the deal, two German-based banks, asking the courts last month to appoint a receiver for the properties in the hopes of recovering $108 million it lent to Collins for the purchase and to get the properties back in good condition, according to court documents.
Also, Capmark Financial Group Inc., whose local office originated the loan that later sold to the German banks and also gave Collins $24 million in mezzanine loans, plans to sell its portion of ownership in the properties at public auction in November, according to public documents.
Collins bought the local six-apartment portfolio from Landmark Properties Trust in July 2006. At that time, the purchase was touted as one of the largest single multifamily deals in the state and made the company one of the largest landlords in Alabama, according to previous news reports. The six-apartment portfolio includes Renaissance at Galleria, Park at Galleria, Place at Galleria, Overlook at Homewood, Magnolia Park at Homewood and Wisteria Park.
In September, the senior lenders on the six-apartment community deal, the German banks Dusseldorfer Hypothekenbank AG and Deutsche Hypothekenbank AG, filed a lawsuit against Collins and its president, Ari Parnes, for defaulting on the loan. The suit asked the court to appoint GlassRatner Management & Realty Advisors LLC of Atlanta as receiver to take responsibility for the properties, directing all rents and payments to GlassRatner and the banks, which it now has, said court documents.
The real estate management and consulting division of GlassRatner focuses primarily on "the management, stabilization, rehabilitation and ultimate sale or liquidation of real estate assets," said its Web site. In the lawsuit, the banks claimed that Collins didn't maintain the apartment complexes and owed thousands of dollars in back utilities.
In a counter suit, Collins said Capmark failed to provide promised refinancing and extensions to the company, therefore resulting in a default on the loan and the receiver taking over the properties. Since, as receiver, GlassRatner had appointed Birmingham's Engel Realty Co. to continue management of the properties, the counter suit suggested Engel be named receiver instead because GlassRatner was a "middleman" collecting $24,000 a month for its services.
Engel manages all of Collins' properties in the state, according to Engel's Web site. Collins' Parnes did not return phone calls for comment in time for press, nor did a representative of GlassRatner. A representative of Capmark Financial was unable to discuss the situation. Collins owns more than 5,400 apartment units in about 13 communities in Alabama, according to its Web site. That includes three apartment communities it purchased in late 2006 from Colonial Properties Trust for $155 million.
After the purchase of the apartments from Colonial, Collins said it had assets in Alabama totaling nearly $500 million in about 7,000 apartment units. Other Birmingham area properties owned by Collins include Riverchase Landing, Grand at Galleria, Autumnwood and Inverness Landing, totaling about 1,870 local units. It also owns complexes in Huntsville and Montgomery, as well as in Georgia and Tennessee.
In previous news releases, Collins said its attraction to Birmingham's multifamily market was its consecutive quarters of rent growth, high occupancy and continued job growth in the area – gold standards for apartment investors across the country and ones that continue to drive investment in the area today. In a 2007 mid-year report on the apartment market in Birmingham, sources said 75 percent or more of the local apartment purchases in the year had been made by out-of-state investors, many with international money sources.
Source: Birmingham Business Journal