Investment in Distressed Multifamily Properties, Which MCAP Repositioned and Financially Restructured

MCAP acquired 50% ownership of four multifamily properties consisting of 800 apartments financed by defaulted municipal revenue bonds.  The total investment was $6.4 million, and returns were generated from the sale of the properties following restructuring of the bonds.

Strategy

• Purchase the existing defaulted municipal bonds at a discount
• Implement renovations to the properties
• Restructure financing of the properties
• Sell the bonds and/or properties

Value Added Actions

• Purchased remaining 50% equity interest in properties for $1.5 million
• Initiated rental increases
• Made an add-on investment of $500,000 to fund renovations and capital improvements
• Negotiated option to purchase $45 million in existing bonds for $35 million

Results

• Simultaneously sold properties and bonds