Phillips & Angley

Apartment complex transaction may exceed $5 billion or $6 billion

A pending commercial real estate transaction may involve between $5 billion to $6 billion changing hands. This deal involves a number of large investors including Blackstone Group LP vying for an apartment complex that contains 11,200 units. "There's been a tremendous demand for multifamily as homeownership rates have declined," said on real estate debt analyst. However, there also is a challenge for the new owners to keep rates for the tenants affordable in order to achieve success.

Delays in the sale appear to be due to ongoing litigation. Disputes between residents, bondholders and investors have been going on for approximately five years. The current owner of the complex faced lawsuits from junior creditors claiming deficiencies in the hundreds of millions of dollars. It appears the owner recently resolved this litigation allowing for the sale to finally go forward. There are currently a number of bidders in the mix so the ultimate outcome of the sale is yet to be determined.

Apartments have been a vital factor in commercial real estate values recovering. The costs for these buildings across the U.S. are 33 percent higher than they were in 2007. We may continue to see increasingly higher purchases of these complexes if buyers foresee the ability to raise rents on these properties.

Avoiding mistakes is essential as disputes often lead to time-consuming and costly litigation. The law firm at Phillips & Angley in Boston has been handling large transactions of this type for decades. It's important to understand regulatory concerns and possible pitfalls of every commercial real estate purchase. The costs alone demonstrate why the best sort of legal advice is required when commercial real estate transactions take place.

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