Pending Sale of Huntington Place Apartments Remains in Limbo
The sale of Brooklyn Park’s Huntington Place Apartments — the second largest complex in Minnesota — remains in limbo.
The complex, which is currently owned by the nonprofit Aeon, is home to thousands of residents.
There’s 834 one-bedroom units in the complex. Only Cedar-Riverside in Minneapolis has more units.
Aeon purchased the troubled apartment complex in 2020, just ahead of the COVID pandemic.
In a meeting with the city council, Eric Johnson, CEO of Aeon, said the complex has had rising costs for security, insurance and unit maintenance.
Inconsistent rent payment from tenants has also been an issue.
“It’s been a challenge,” Johnson said.
The sale of Brooklyn Park’s Huntington Place Apartments — the second largest complex in Minnesota — remains in limbo.
City Loan
As part of the 2020 Huntington purchase, the city of Brooklyn Park loaned Aeon $5 million.
In return, Aeon accepted a restrictive covenant that keeps rents affordable.
Aeon used about $3.5 million of that loan for projects at the complex. With interest, Aeon now owes the city about $3.8 million.
However, Aeon is at risk of foreclosing on the property and wants to sell to New York-based MAS Capital Group.
The sale is contingent on forgiveness of the $3.8 million loan.
The Brooklyn Park City Council met with Aeon and MAS Capital Group in a Jan. 21 work session.
If the loan isn’t forgiven, Aeon will likely go into foreclosure, tanking the deal with MAS Capital. Huntington Place then could be sold on the open market.
“When an asset goes to foreclosure, lots of times there’s sharks in the water that can find a deal for pennies on the dollar from a bank,” said Moshe Mermelstein, principal at MAS Capital. “They try to flip it to the next person and it’s a disaster. But there’s always people looking to make a dollar. There’s no shortage of those people. For whatever reason, I can’t say how we got here, but we’ve decided, we zoomed in and this is something we’re willing to put in the effort and the time and the money, do it the right way.”
While Aeon had plans to convert some of the complex’s one-bedroom units into larger living spaces, MAS doesn’t share that vision.
“Everything about the deal would have to change,” Mermelstein said of converting units. “There’s less unit income … the current deal would never make sense.”
It’s unclear if the council will give the go-ahead on forgiving the loan. If the complex goes into foreclosure, the city does not expect to recoup the $3.8 million loan.
“There are people that are simply saying, ‘hey, if it defaults, it defaults,'” said Mayor Hollies Winston. “The city still does have some leverage here. And I think what bothers me sometimes is I come to these meetings, it sounds like we have absolutely no leverage when it comes to this. And the residents are telling us, ‘you’ve got some leverage,’ where many of the residents are not in favor of this.”
The council could make a decision on the loan forgiveness within the next two months.
