June 20 (Bloomberg) -- A real estate fund created by Citigroup Inc. and L&M Development Partners bought New York’s Savoy Park apartment complex, resolving the troubled mortgage on the 1,800-unit property.
The complex sold for more than $210 million, the outstanding balance on the delinquent senior mortgage, satisfying the loan, according to a person with knowledge of the deal who asked not to be named because the terms weren’t public. The sellers are AREA Property Partners LP and Vantage Properties LLC, which bought the property in 2006, near the peak of the commercial real estate market.
The rent-regulated complex of seven apartment buildings between 139th and 142nd Streets in Harlem will remain as affordable housing, according to a statement today by the buyers. The deal was done under a venture formed by Citigroup and L&M in 2010 known as the New York Affordable Housing Preservation Fund.
“We are committed to preserving affordability and upholding the unique culture and vibrancy of the Savoy Park community,” David Dishy, president of the fund, said in the statement.
Jonathan Gasthalter, a spokesman for Vantage, confirmed the sale.
Vantage and AREA paid $175 million for Savoy Park in 2006 and borrowed against the property the following year, adding $367.5 million of debt, including a $210 million senior mortgage that was packaged into bonds and sold to investors.
The joint venture was unable to raise lease rates at the rent-regulated property high enough to cover the debt service, prompting a transfer in 2010 of the senior loan to a so-called special servicer, according to data compiled by Bloomberg. Special servicers negotiate with distressed-property owners on behalf of commercial-mortgage bondholders.
The complex, which was valued at $420 million in 2007, was appraised at $153.3 million in 2011, Bloomberg data show.
“We are pleased the property is transitioning to excellent new owners that will continue to maintain Savoy Park as a model community for families in Central Harlem,” said Neil Rubler, president and chief executive officer of Vantage.
An affiliate of L&M will take over management of Savoy Park from Vantage Properties, according to the statement. L&M has built more than $2 billion of apartment housing in the New York metro region, totaling more than 10,000 units.
Vantage owns and operates 5,000 apartment units in New York City, as well as 2,200 in central New Jersey that it acquired from American International Group Inc. in 2011. AREA has invested about $13 billion of equity in more than 500 transactions, according to the statement.
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