Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Thursday, 01 November 2018

Owner of Apartment Portfolio Sues to Nullify UCC Auction Brought by Mezz Lender

Atlas Apartment Holdings, a Dallas investor that bought a portfolio of 11 apartment properties in Texas five years ago, is trying to get a New York State court to nullify a foreclosure auction conducted by Macquarie, which held a $71 million mezzanine loans against the portfolio. A New York court last month dismissed a counterclaim brought by Macquarie and KKR & Co., which had won the foreclosure auction.

Commercial Real Estate Direct Staff Report

Atlas Apartment Holdings, a Dallas investor that bought a portfolio of 11 apartment properties in Texas five years ago, is trying to get a New York State court to nullify a foreclosure auction conducted by Macquarie, which held a $71 million mezzanine loans against the portfolio.

It claims that its lender breached its loan agreement and subsequently conducted a "commercially unreasonable" auction under the New York Uniform Commercial Code. So, it's suing for at least $30 million and to recover the difference between the proceeds that would have been generated if a commercially reasonable auction were held and the $76.25 million offer Macquarie had accepted at the auction.

As part of its suit, Atlas also claims that KKR & Co. had colluded at the UCC auction with Macquarie. KKR had submitted the $76.25 million bid that was accepted, despite being topped by a $77 million offer by Atlas. Both KKR and Macquarie had filed to dismiss those claims, but Judge Charles E. Ramos denied them. Atlas argues that Macquarie and KKR sought to "loot and then divide up Atlas' equity" in the portfolio.

At issue is how UCC foreclosure auctions are conducted. They're typically used in the event of a foreclosure of a real estate mezzanine loan, which typically are backed by the equity interests in the entity that owns the collateral properties. They're often conducted behind close doors, usually at the office of the plaintiff's attorney. And some argue that, besides legally required public notices, they're usually not very transparent affairs.

Atlas had purchased the portfolio from affiliates of Transcontinental Realty Investors in 2013 by partnering with the International Investment Bank of Bahrain and paying $250 million. It assumed what's now $140 million of senior U.S. Department of Housing and Urban Development financing and had lined up $71 million of financing from Macquarie Bank.

The properties in the portfolio are in the Dallas/Fort Worth, Houston, Midland/Odessa and El...





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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