Monday, September 28, 2009

Investors lining up for Stoneleigh Residences

Auction for bankrupt project set for Oct. 13; minimum bid is $4M

More than 30 prospective investors have expressed interest in bidding on the high-profile, half-built and abandoned Stoneleigh Residences condominium tower in Uptown, according to bankruptcy court documents.

Bids are due into AP-Prescott Stoneleigh Residences LP by Oct. 9, and the auction is scheduled for Oct. 13, the documents said.

Dallas-based Hayman Woods Maple Avenue LP has set the minimum bid at $4 million. The firm is led by partners Kyle Bass and Jonas Woods, who, until he left in April 2007, was president of Hillwood Capital and the driving force behind Victory Park.

“Honestly, we think the property is valued much higher than that,” said Clay Likover, managing director of the private real estate investment fund. “If someone outbids us, we can raise our bid, and we will.”
Court documents outlining the list of prospective bidders include such companies as Harwood International, Fairfield Residential, Lincoln Property Co., Fulton Anderson Realty Advisors, Gables Residential and Matthews Southwest.

“It’s about opportunity,” said Kristian Teleki, a senior vice president with Matthews Southwest. “It’s a very, very good location.”

On May 4, AP-Prescott Stoneleigh Residences LP was forced into Chapter 11 reorganization by five creditors, the largest of which was the general contractor, Turner Construction Co. It claimed the owner of the Stoneleigh, Prescott Realty Group, had not paid for about $4.7 million of work.

Turner Construction had filed a lien valued at more than $4.7 million against Stoneleigh Residences. Various North Texas subcontractors had filed at least $3.5 million in liens against Turner Construction for work completed at the Stoneleigh.

According to court documents, there is an estimated $24 million in secured debt against the property.

The Stoneleigh Residences at 2919 Maple Ave. is part of a renovation of the historic Stoneleigh Hotel, which has an estimated project cost of more than $70 million. The hotel and residences were supposed to be built concurrently, but the hotel opened last year before work really got under way on the 21-story condo tower. A 400-space parking garage on the site was finished first, followed by work on the tower.

But in the midst of a global financial crisis that appears to have peaked last fall, the developer’s credit sources dried up and, in April, Prescott stopped work after contractors reached the 10th floor of the building, Prescott representatives told the Dallas Business Journal in May.

The 1.56-acre site is valued at $5.2 million, according to the Dallas Central Appraisal District.

“When it’s finally time to build apartments again, this will be the first site to be developed,” Likover said, estimating that Prescott spent about $30 million on the half-built condo building. The 400-space parking garage alone cost an estimated $10 million, he said. “When the world comes back, which it eventually will, Uptown Dallas is the best apartment location in the city. And you’ve got a huge head start in the development time frame and in terms of costs.”

Likover said the work that Turner Construction already has completed could mean the difference between taking two years to purchase a site and build new, versus 14 months to finish the existing structure.

The value of the Stoneleigh depends on what individual developers want to do with the site, Teleki said.

“The existing construction, that can either be a liability or an asset,” he said. “If you’re going to do exactly what was planned, then you’re a little bit closer.”
Teleki wouldn’t comment on the coming auction or whether Matthews Southwest would bid on the site. But he did say the Stoneleigh is “one of many” distressed properties in which the developer has expressed an interest.

“As an asset, it, like others, is attractive,” he said.

Katherine Cromer Brock