Pantzer Grabs M-F High-Rise in Metro D.C. for $168M
- Aug 16, 2012
While many investors continue to vie for premier assets in metropolitan Washington, D.C.’s apartment market, Pantzer Properties Inc. has been keeping its eye on troubled assets and it just snapped up a big one. The real estate company just completed the purchase of The Georgian, an 891-unit high-rise complex in Silver Spring, Md., plucking the property out of bankruptcy for $168 million.
“We like buying something where there’s a disconnect, where either there’s an ownership issue or it’s a lender issue or it’s a management issue or some kind of a structuring issue,” Jason Pantzer, co-president of Pantzer Properties, told CPE. “We like it when there’s nothing wrong with the real estate but there’s something convoluted in the structure.”
The Georgian, well-located 10 miles north of Washington, D.C., at 8750 Georgia Ave., ticked all the right boxes.
“It’s hard to find a high-rise with 900 apartments inside the Capital Beltway,” Pantzer said. “And it has terrific bones. It’s the kind of asset I don’t’ think could be built again. The Georgia also boasts roughly 25,300 square feet of retail space, a 594-unit parking facility and a rooftop pool, one of the few–if not the only–rooftop pools in the area. Additionally, a few years ago the complex of two 14-story towers benefited from $40 million in renovations at the hands of the previous owner, Stellar. “The asset was polished a bit and they did a first-class job,” he added. In terms of the downside Pantzer was looking for, the property was saddled with debt, approximately $215 million of debt.
Stellar, like so many other real estate companies, fell victim to the credit crunch and ultimately defaulted on the loan and filed for bankruptcy. The Georgian had been in receivership for three years and in bankruptcy for one.
“Here you’ve got a trustee, a receiver which was Greystar Management Services, you had a special servicer which was Helios, you had a seller, you had a lender and you had a bankruptcy judge. It was a complicated deal,” the co-president added.
Pantzer has a history with the Georgian. The company agreed to serve as manager when the apartment community was in the hands of GE Capital back in the 1990s. Pantzer managed the property for a few years and even tried to acquire it at the time, but GE was not prepared to let it go. As the years passed, other companies attempted to snap up The Georgian.
“Lowe [Enterprises] had tied it up for $194 million, then Berkshire had it tied up after that in the $170 million-dollar range,” Said Pantzer. “It fell out both times so the price kept going down and we became very, very interested in it. We bought it for what we believe was a really nice price for us. It’s always beneficial when an asset is tied up a couple of times beforehand at higher prices. It was suffering from deal fatigue.”
Pantzer Properties acquired The Georgian through the Panco Strategic Real Estate Funds, a series of opportunistic funds.
It’s a new day for The Georgian. Pantzer will rebrand the property, rename it The Point at Silver Spring. And continue the renovation program that Stellar was forced to abandon.
“I think you have a solid B+ asset in a terrific location,” Pantzer added. “We’re certainly not trying to make it Class A. The unit finishes will probably be Class A, the amenities package is Class A. There are certain things about it that you can’t replicate. We want to give someone a Class A experience at Class B+ prices. We plan on adding value and we plan on holding it for a while.”