10 D.C. Apartment Properties Hit The Market After Owner's Bankruptcy
Nine properties east of the Anacostia River and one in Brightwood totaling 134 units are on the market for sale as a result of their owners' bankruptcy filing.
Marcus & Millichap is marketing the properties, owned by Ali “Sam” Razjooyan, after his ownership entities for the 10 properties filed for Chapter 11 bankruptcy in May.
The trustee appointed to the case, Stinson partner Marc Albert, secured the brokerage firm to market the properties as a potential workout. The court authorized the move last week, and Marcus & Millichap's brokers announced a listing for nine of the properties on LinkedIn Tuesday.
The properties were headed to a foreclosure sale in May after lender TD Bank filed a foreclosure notice, but that process was halted when Razjooyan filed for bankruptcy.
Marcus & Millichap is marketing the nine properties east of the Anacostia River for individual sale or as a portfolio and the Brightwood property separately. The properties are:
- 1416 Eastern Ave. NE — six units
- 945 Longfellow St. NW — 13 units
- 2501 Naylor Road SE — eight units
- 4301-4313 Wheeler Road SE — 49 units
- 4263-67 Sixth St. SE — six units
- 4935 Nannie Helen Burroughs Ave. — six units
- 3968 Martin Luther King Junior Ave. SE — six units
- 4010 Ninth St. SE — 14 units
- 2440 S St. SE — 11 units
- 4400 Hunt Place NE — 15 units
If they sell, TD Bank would get paid back because it is the lone secured creditor, though it is unclear if the sales would even total the debt it is owed, Albert said. Payment to any other unsecured creditors is “unlikely,” he said.
Razjooyan purchased all 10 properties as value-add opportunities within the last five years, Marcus & Millichap associate John Slowinski told Bisnow, and then the investor renovated each one. The majority of the tenants have housing choice vouchers that allow them to choose where they want to live with subsidies from the District, he said.
Marcus & Millichap Senior Vice President Marty Zupancic said that his 17-year-old group within the firm specializes in multifamily distress, so it is well-positioned to take on this effort.
“We are definitely the experts in the D.C. metro market when it comes to multifamily distress,” he said. “We’ve worked on a lot of bankruptcies and worked on a lot of complicated deals with issues, and that's why we were chosen and selected by the Chapter 11 trustee on this one. We understand how to navigate it. We know how to explain what's going on and how to navigate this from where it's at into closing with new ownership.”
Zupancic said he expects a “high level of interest” in the properties, considering a recent slew of new buyers interested in coming into the D.C. market, especially east of the Anacostia River.
As the bankruptcy proceeds, Razjooyan is facing two separate lawsuits by D.C. Attorney General Brian Schwalb involving other properties he owns in Wards 7 and 8. The suits filed in September allege Razjooyan’s properties violated housing codes, pose “serious health and safety threats,” and they also allege the landlord undertook illegal construction work and defrauded the city’s rapid-rehousing program.
“Razjooyan’s business model involves forcing tenants to live in deplorable, unsafe, horrific conditions that are shocking to the conscience,” Schwalb said in a release. “No District resident should have to endure such treatment.”
Razjooyan has additional properties that are in bankruptcy proceedings, Albert told Bisnow.
