Atlanta Apartment Owner Attempting Sale After Defaulting On Arbor Realty Trust Loan
A 1970s-era College Park apartment complex is being marketed for sale as the lender mulls a possible foreclosure on its $37M loan.
The owner of Chelsea Gardens, a 474-unit workforce-grade garden-style apartment complex eight-and-a-half miles south of Downtown Atlanta, has tapped John Bergin of Waterstone Multi-Housing Advisors to sell the property, Bergin confirmed to Bisnow.
Hanoch Michael Cimerring of Long Island, New York is listed in state records as Chelsea Gardens' owner. His attempt to sell the property is a race against time before his $37.1M loan is potentially foreclosed on.
Cimerring landed the interest-only loan in February 2022 from an affiliate of Arbor Realty Trust, and the debt is facing a maturity on Feb. 10, according to Morningstar Credit.
The loan was transferred to special servicing last month for imminent non-monetary default. The ownership started making late payments in May and was between 60 and 89 days delinquent in October, according to the Morningstar Credit database.
Arbor's reporting on the collateralized loan obligation for special servicer noted that the planned workout strategy is foreclosure, according to Morningstar.
Bergin declined to comment on whether the ownership has secured a buyer as of press time.
The complex, first constructed in 1972, encompasses 45 buildings on 24 acres and includes a dog park, fitness center, tennis court, playground and laundry facility. But the complex — which is 89% occupied, according to an offering memorandum on LoopNet — has 12 units offline after they were damaged in a May fire that the ownership is attempting to get insurance money for, according to the memorandum.
“At the time of acquisition, there were over 200 vacant units in some level of disrepair and since have all had a degree of remodel,” according to Waterstone’s memorandum.
Chelsea Gardens is one of many real estate assets secured by Arbor Realty loans that are facing troubles in a higher interest rate environment. In the third quarter, Arbor modified $1.2B in loans and modified or foreclosed on $1B in past-due loans, Arbor Realty CEO Ivan Kaufman said on a Nov. 1 earnings call.
The firm expects to foreclose on or otherwise seize properties tied to another $250M in loans over the next few quarters, Kaufman said.
“We have started to take back real estate in the third quarter, and we expect to take back more over the next few quarters,” Arbor Chief Financial Officer Paul Elenio said on the call. “The process of taking control and working to improve these assets and create more of a current income stream takes time, which, as I mentioned on our last call, will likely result in a low watermark for net interest income over the next couple of quarters until we have worked through this portfolio.”
The Department of Justice and the New York office of the FBI were investigating Arbor’s lending practices and loan book, Bloomberg reported in July. The investigation followed a report from short seller Viceroy Research that accused the real estate lending giant of hiding losses by financing the purchase of assets from its own foreclosure in off-balance-sheet transactions.
