AREA pays $50.4m for ex-Fairfield properties

AREA Property Partners has bought two Atlanta multifamily properties for $50.4 million out of foreclosure, after the original borrower filed for Chapter 11 bankruptcy protection.

The New York-based firm acquired the 878-unit rental apartments Manchester at Mansell and Chatsworth, in Roswell, Georgia and Atlanta, respectively, after lender RBC Capital Markets foreclosed on the assets from Fairfield Residential.

Fairfield filed for bankruptcy protection in December 2009 after it was unable to refinance its debt or sell investment properties. The development and investment company built roughly 64,000 apartments, condominiums and off-campus student-housing units throughout the US.

AREA said in a statement it would use tax-exempt bond financing secured against the assets to fund the deal, adding: “The amount of bond financing that runs with these properties is significantly in excess of the asset purchase price.” Richard Mack, AREA North America chief executive officer, added that the properties were bought at  “substantial discount”.

According to data provider Real Capital Analytics, Manchester at Mansell, at 401 Huntington Drive, was acquired by AREA for approximately $28.2 million, while the Chatsworth complex, at 4700 North Hill Parkway, was bought for about $22.2 million. Fairfield acquired both properties for $46.4 million and $33.1 million, respectively, in 2007.

As part of its Chapter 11 bankruptcy filing Fairfield agreed with lenders to transfer various assets and operations to a new company, while leaving behind certain assets in a liquidating trust. In August, Fairfield emerged from Chapter 11 following a $29 million recapitalisation from Brookfield Asset Management and the California State Teachers' Retirement System (CalSTRS), with whom it had done a variety of JVs.

As part of the deal Brookfield acquired a 65 percent stake in the company in return for providing up to $150 million to fund future investment opportunities.