Sale of Brooklyn Park Apartment Complex In Limbo Until 2025
The sale of Huntington Place Apartments — the second largest apartment complex in the Twin Cities and the largest in Brooklyn Park — will remain in limbo at least through the end of the year.
The owner of the complex, the nonprofit housing developer Aeon, is at risk of foreclosure, according to Brooklyn Park city staff.
Aeon bought the property back in 2020, just ahead of the outbreak of the COVID-19 pandemic.
It’s home to more than 2,500 residents living in more than 800 one-bedroom apartments. Only Cedar Riverside in Minneapolis is larger.
Due to a restrictive covenant, rent at the property is lower than market rate.
However, Aeon says it can’t afford to operate the complex.
“This is our last stand. We have no more options after this,” said Eric Johnson, CEO of Aeon in an October meeting with the Brooklyn Park City Council.
Property Sale and Loan
With cash flow issues, the developer wants to sell the property to New York-based MAS Capital Group.
But there’s a catch: Aeon still owes money to its lenders, including the city of Brooklyn Park.
Aeon borrowed about $3.5 million from the city. And even if the property is sold or goes into foreclosure, the nonprofit is unlikely to pay that money back.
“According to Aeon, the offer price is such that there are not proceeds from the sale that will go to the seller (Aeon), the lender in second position (LISC), or the lender in third position (Brooklyn Park EDA),” wrote Brooklyn Park community development director Tim Gladhill in a memo to the council. “This distressed financial situation is not unique to Huntington Place.”
If Aeon sells to MAS Capital Group, the restrictive covenant keeping rents low would transfer to the new owners.
City staff say, however, that MAS Capital Group won’t buy the property unless the city forgives the $3.5 million loan.
If the city doesn’t forgive the loan and the property goes into foreclosure, it could be sold on the open market without any promises of affordable rent.
The sale of Huntington Place — the second largest apartment complex in the Twin Cities — will remain in limbo through the end of the year.
Brooklyn Park Council Unsure of Buyer
Some city council members don’t think the new buyers are being transparent.
Council Member Christian Eriksen said he was “deeply concerned” about MAS Capital.
“I was looking through the other property managers that operate property in the city,” he said. “And they proudly display their portfolio for all to see. ‘We own this thing, you can rent it for this much money.’ I have searched high and low on the internet for this MAS Capital Group. And what do they own, where is it? … And we have specifically asked them for their portfolio, and have gotten nothing.”
Mayor Hollies Winston concurred.
“I think my concern is what type of partner are they getting into it with when they don’t answer these basic questions,” he said.
The council will hold off on the deal until at least mid-January 2025.
“They have to convince me that they’re a safe way to lose this $3.5 million at this point,” said Eriksen. “Because in some ways foreclosure seems safer.”
