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