A joint venture between Glenmont Capital Management and Tarpon Partners – an affiliate of The Swerdlow Group – has acquired the first mortgage note secured by the 414 unsold residential units at Marina Grande on the Halifax, a luxury waterfront condominium project located in Daytona Beach, Florida, for approximately $60 million. Simultaneously, the venture acquired title to the units via a deed-in-lieu of foreclosure agreement executed with the current owner. The transaction enabled the Glenmont venture to gain control of the $240 million project for less than 25 percent of its original cost.
Marina Grande is a two-phase, 972-unit residential condominium development located along the Halifax River in the heart of the Daytona Beach. Completed in 2009, Phase I consists of two 25-story towers totaling 486 condominium residences, of which 319 had been presold during construction. Due to the collapse of the residential real estate market in Florida during the recession, only 72 of those signed contracts closed, leaving a majority of the development’s first phase unsold and unoccupied.
The venture, co-sponsored by Tarpon Partners and Glenmont Capital Management, acquired the remaining 414 unsold residential units along with the commercial units and plans to invest additional capital for the construction a 10,000-square-foot clubhouse, a 32-slip marina, a resort-quality pool, a state-of-the-art fitness center and other related amenities. Unit sales of Marina Grande will resume immediately, with a limited number of units anticipated to be offered at an approximate 50 percent discount to the original pricing – a substantial discount to the construction cost of the units and today’s value.
“Given Tarpon’s prior history and intimate knowledge and understanding of the complexities associated with the development, our venture became the only logical buyer, enabling us to acquire the project at extraordinarily favorable pricing,” said Lawrence Kestin, managing principal of Glenmont. “We, in turn, now have the ability to generate opportunistic returns without the need for unrealistic market growth, while at the same time we can offer these units to buyers at a price point that represents a significant discount to peak market pricing.”
Development of Phase II of Marina Grande, which is planned for two additional 25-story towers containing 486 units, is expected to commence upon the completion of Phase I sales. The venture also owns Phase II by virtue of a separate acquisition and deed-in-lieu of foreclosure transfer of the first mortgage debt encumbering the Phase II site at a 60 percent discount to the loan balance. That transaction occurred early last year.
Founded by Kestin and Joseph Smith, Glenmont is a New York-based private equity firm that invests in opportunistic real estate and real-estate related investments in the $20 million to $100 million range throughout the United States. Tarpon Partners is a South Florida-based private real estate company involved in a broad range of development, management, leasing and ownership activities.