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A blog about the economy and the Sacramento-area real estate market.

April 6, 2010
Short sales spread to a Sacramento apartment complex

 It's not news in the least that short sales are a routine now in Sacramento's distressed housing market. But we got a report this afternoon of possibly the first for an apartment complex.

 That is Bradford Pointe Apartments with 72 units near Sacramento's Arden Fair Mall. It  closed escrow at the end of March for $2.9 million. That was well below more than $4 million owed on the property, according to TRI Commercial executive John Gallagher.

Gallagher said the transaction is one of the first apartment short sales in the area, an assertion backed up by others in the business.
"The bank really did not want to foreclose on the asset, and saw this as a better means of disposing of its problem," said Gallagher, senior vice president of TRI's Apartment Advisory Team, along with apartment specialist Dean Bagneschi.

In short sales, banks take less than owed to avoid the higher costs of foreclosing and re-selling in a falling market.

Gallagher, as is typical in these deals, wouldn't name the buyer, seller and the bank that agreed to the short sale.

But we ran a public records search of the address and identified the lender as Puerto Rico-based Banco Popular. The seller was Bradford Pointe LLC, a Santa Cruz County partnership.

Gallagher said the bank declined another buyer's offer to assume the existing loan. He said, "The lender wanted to cash out of the transaction."

The lender's loss of more than $1 million in the deal represents a new phase in an increasingly weakened commercial real estate market. Across the region more than 100 apartment complexes are in financial distress, said Marc Ross, a senior Sacramento associate at commercial broker CB Richard Ellis.

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