Once In Foreclosure, East Side Towers Sell For $94 Million
Park Lafayette Towers sold to Utah investment trust with 13,050 units across the U.S.
Park Lafayette Towers. Photo by Jeramey Jannene.
In one of the biggest property sales in recent Milwaukee history, two East Side apartment towers are under new ownership.
The 271-unit Park Lafayette Towers complex was sold for $94.1 million.
Salt Lake City-based Cottonwood Communities Inc., a real estate investment trust (REIT), acquired the 20-story towers from an affiliate of Milwaukee-based Mandel Group.
The July 30 sale does not yet appear in Wisconsin real estate transfer records, but it was disclosed in Cottonwood’s quarterly report filed with the U.S. Securities and Exchange Commission on Aug. 14.
The sale adds another chapter to the unusual history of the prominent Prospect Avenue complex.
Park Lafayette, 2036 N. Prospect Ave., was originally developed as a condominium project by Chicago-based developer Warren Barr. Construction stopped in February 2009, during the collapse of the housing market, with the project approximately 90% complete and only eight condos sold.
Amalgamated Bank, which financed the development, ultimately gained control of the property in 2011 through a $55 million credit bid. It claimed it was owed $102.8 million in its foreclosure suit. Rather than complete Park Lafayette as condos, the project was converted into apartments. Mandel Group was hired to manage the property after the firm’s COO, Robert Monnat, served as the court-appointed receiver. Barr later went to prison.
Despite the latest ownership change, Mandel will remain involved with the property. Mandel Property Services Inc. informed residents that it will continue providing day-to-day management of the towers, working with Cottonwood under the new ownership structure.
Cottonwood is a publicly registered but non-traded REIT that raises money from individual and institutional investors through sales of its shares, rather than through shares traded on a stock exchange.
The company, incorporated in Maryland in 2016 and based in Utah, reported that as of June 30 it had ownership or structured investment interests in 47 apartment communities totaling 13,050 units across the United States, including projects under construction. It also held interests in five development sites. Cottonwood reported approximately $2.23 billion in total assets, including $1.89 billion in real estate assets.
According to its SEC filing, Cottonwood financed the Park Lafayette acquisition through a combination of assumed seller financing, proceeds from a 1031 real estate exchange and cash on hand. A 1031 exchange allows an investor to defer capital gains taxes when proceeds from one real estate sale are reinvested in another qualifying property.
It is the company’s first acquisition in Wisconsin.
The complex, which consists of several parcels, has an assessed value of about $76 million. It was one of the 10 most valuable properties in the city before being supplanted by the development of the Ascent and 333 Water luxury apartment towers.
Addison Lathers of the Milwaukee Business Journal first reported the sale.
Earlier this year, Mandel sold the Belay Apartments, 2200 N. Commerce St., to La Crosse-based Three Sixty Real Estate Solutions for $12.2 million. Mandel completed that development in 2016.
A representative of Mandel did not respond to a request for comment by the time of publication.
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