On the scout for distressed property

IRVINE, CALIF., California-based repositioning specialist The Bascom Group and Warburg Pincus Real Estate I, a private equity fund based in New York City, plan to invest up to $200 million in distressed apartment assets and troubled multifamily loans through a joint venture the companies formed last year. The venture is targeting high- interest conduit loans originated in the 1990s with defeasance/ prepayment penalties -- both one-offs and portfolios -- in the $1 million to $100 million range.

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Beginning in California in 1996 and recently expanding into the Southeast, Bascom established a track record of buying and repositioning distressed multifamily assets.

Bascom Managing Director and Co-Founder David Kim said the venture with Warburg Pincus “is a new avenue to maximize Bascom’s operating capabilities and create additional value for our partners and investors.”

“With the ability to close on an all-cash basis, Bascom offers originators and note holders the alternative to quickly and seamlessly dispose of distressed assets,” said Chad Sanderson, Bascom VP of Business Development. He plans to capitalize on rising distress in the South, Southeast and Midwest condo and apartment markets, as well as San Diego and Las Vegas, both of which have an overabundance of condos.

The venture acquired two assets last year in Dallas, where Bascom has an office headed by Regional Director Ryan Akins. The 23-year-old, 430-unit Arbor Park, was 80 percent occupied when escrow closed on October 25. The seller was Urdang & Associates Real Estate Advisors.

Bascom plans to spend around $8,000 per unit on upgrades at the property. The venture bought the 37-year-old, 272-unit Spanish Village in the Richardson sub-market of Dallas in an off-market transaction on November 28 from a private seller. That asset, which includes garden-style apartments and 52 duplex units, was 90 percent occupied at close. About $10,000 per unit are set aside for renovations. Armand Charbonneau and Mark Freeman, vice presidents with Transwestern’s Dallas office, represented Bascom in the deal.