Priced REO Property Comes to Market

LAS VEGAS-The 157 unsold units at the 300-unit Palmilla Townhomes development in North Las Vegas are on the market for $10.55 million, which represents $67,197 per unit and $43 per square foot. The receiver, Greystar, hired Marcus & Millichap to handle the disposition. One of the listing brokers,Michael LaBar, a director of M&M’s National Multi Housing Group, tells GlobeSt.com the deadline for offers is Dec. 4.

The development is located on 8.98 acres at 5850 Palmilla St. adjacent to an Aliante master-planned community in North Las Vegas. The 157 units that are for sale–a mix of two-, three- and four-bedroom townhomes with direct access to two-car garages–represent 52.3% control of the homeowner’s association.

Palmilla Townhomes was constructed between 2006 and 2007 with 90% of Phase I sold to individual owners and Phase II completed as a rental property,” explains LaBar, who is marketing the property with fellow M&M broker Evan Griffith. The bulk of the units (144) are contiguous and housed in 12 buildings in the second phase of the project. The remaining units are spread out in the four buildings included in the first phase.

Palmilla Development Co., the developer was led by Hagai Rapaport, according to Public Records. He reportedly fell behind on loan payments in late 2008 before giving the property back to the lender in lieu of foreclosure. The receiver is Greystar, which is managing the property while also directing the sale. Artesia originated the note and Midland is the master and special sevicer.

“Most of the listings coming out really are not priced and so we wanted to price this because there are a lot of buyers on the sidelines waiting for deals and many of them won’t waste time looking at an asset if it is not priced,” LaBar tells GlobeSt.com. “This is one of the first deals to come out priced.”

At $43 per square-foot, the units are priced at less than half the cost it would take to recreate them today, LaBar says, estimating replacement cost at $100- $110 per square foot. Two years ago, the selling price for the units was $170 per square foot.

Greystar is reportedly busy improving the occupancy at the property, which suffered after the property fell into default. Current occupancy is approximately 65% and rising, up from 50% when Greystar took over management. At $10.55 million, the initial cap rate is approximately 6.4%, assuming current rents (approx. $0.70 per square foot) and 75% economic occupancy, he says.

“We have scheduled tours of the property a couple days a week for registered buyers,” he says. “We encourage all buyers and outside brokers to register with Marcus & Millichap before touring the property.”