Municipal Capital Appreciation Partners

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