Four bankrupt multifamily properties, totaling 1,512 units, in New Orleans that were previously owned by Crown Capital are now for sale.
Moshe “Mark” Silber, a principal at Somerset, New Jersey-based Crown Capital, was sentenced to 30 months in prison earlier this year for his role in a conspiracy to commit wire fraud affecting a financial institution.
However, Silber’s legal issues aren’t the only challenges facing the four properties. Currently, 412 units in the portfolio are offline, according to a news release shared with Multifamily Dive.
“Hurricane Ida came through the properties and money was not invested back into them,” said Steven Landgraber, senior managing director at New York City-based merchant bank IslandDundon, which was hired to advise Crown Capital on its restructuring strategy. “Some of those units have just been down for quite some time.”
Chicago-based commercial real estate services firm Cushman & Wakefield and New Orleans-based brokerage firm Larry G. Schedler & Associates are leading the sales effort on behalf of a court-appointed ownership entity representing the portfolio’s debtors. The apartment communities could be sold individually or as a portfolio. There is no set price, and offers are due Sept. 10.
“These assets have been effectively starved for capital and have not had leadership for quite some time due to prior management’s absence,” Landgraber said.
Larry Schedler, principal of Larry G. Schedler & Associates, told Multifamily Dive that the properties received new roofs after Hurricane Ida, but are still in need of interior renovations.
“Although there's some exterior work to do, the majority of the capital that needs to be expended is really going to be in the interiors,” Schedler said. “Three of the four are in the upper-40% to low-50% occupancy range. There is one asset that is about 20% occupied.”
The portfolio consists of:
- Carmel Brook, a 548-unit property, built in 1984
- Carmel Spring, a 400-unit property, built in 1983
- Laguna Creek, a 216-unit property built in 1981
- Laguna Reserve, a 348-unit multifamily community built in 1982
The portfolio is located within a 3-mile radius along Interstate 10 in the East New Orleans Opportunity Zone. That area lost nearly 4,000 units after Hurricane Katrina, making these four properties one-third of the housing stock in the area, according to Schedler.
“There's a shortage of affordable housing in metro New Orleans, like there is all over the country,” Schedler said. “This creates a very interesting opportunity for someone. All of these properties have washer-dryer connections, so they would they would be a great candidate for good, solid workforce housing.”
So far, Schedler said private buyers have shown interest in the portfolio. The right purchaser could potentially transform the entire area.
“It's a real opportunity for someone to get in there who has the construction expertise to bring these units online,” he said. “There is no doubt they would have demand for these units, and I think some of the reverberations of this would certainly help with them trying to create more rooftops out there.”
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