A Woodland Hills, California-based investment firm just paid $43 million for the Sola at Celebration apartments — a condemned multifamily community at the center of litigation between developer Hines and its previous owner Southstar Capital Group.
With 306 units, Cohen Goldstein Investment Strategies paid about $140,500 per apartment. Southstar spent $67 million on the development in 2016, the same year the six-building complex at 1688 Celebration Blvd. was completed.
About a year later, the Osceola County Building Department condemned each building for faulty construction. By the end of September 2017 the complex had been vacated and remains so today.
Boca Raton-based Southstar sued developer Urban Oaks Builders and parent company, Hines, alleging the company and affiliates withheld, concealed and misrepresented defective building conditions at Sola.
The Houston-based real estate investment, development and management firm has more than $116 billion worth of assets under management across the globe.
In September, Hines subsidiary Urban Oaks Builders, which built the luxury apartment complex in Celebration, filed for Chapter 11 bankruptcy protection in the Southern District of Texas. Subsequently, Hines and Urban Oaks sued its insurers for denying claims related to the project and refusing to pay for the legal defense in the Southstar lawsuit, as reported by GrowthSpotter.
CBRE’s Shelton Granade, Luke Wickham and Justin Basquill represented the seller in the off-market deal.
Kenneth Delvillar, a director at Cushman & Wakefield‘s multifamily Orlando office, has been paying attention to the property over the years.
“You don’t find a lot of distressed properties on the market nowadays,” Delvillar said. “I think the buyer definitely has a good turn-around story on their hands.”
He said the price paid per door is significantly low when compared to the market value of a garden-style community, which could fetch northward of $200,000 per unit.
“To be in a best-in-class location and have a turn-around situation — all in one — is really special,” Delvillar said. “It’s a huge positive for the market.”
CGI is a boutique real estate investment firm with a portfolio valued at $900 million. The company also specializes in arranging financing and equity capital.
It has several developments in Los Angeles, Atlanta and New York. A representative at the company was not immidiately available to comment.
The deal gives CGI control of more than 14 acres of land along Celebration Boulevard, where a number of new developments are planned.
Developer Kettler plans to start construction in late spring on a 368-unit apartment complex in Celebration. Kettler’s approved plans also include a 134-key hotel and 100 senior housing units on an 18.4-acre commercial parcel on Celebration Boulevard. The property is next to Adventist Health Sytem’s new $20 million skilled nursing and rehab center.
The Sola at Celebration apartments are also near Big Rock Partners‘ Windsor at Celebration community, which opened in 2018 at 1370 Celebration Blvd. The development was the first age-restricted community in Celebration, with 151 resort-style independent apartment units with 55 assisted living units and 33 memory care units.
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