Sale of Huntington Place Apartments Uncertain, Foreclosure Risk Grows
The sale of the second largest apartment complex in the Twin Cities now hinges on a federal grant being transferred to the city of Brooklyn Park.
Aeon, the current nonprofit owner of Huntington Place Apartments in Brooklyn Park, told the city officials it needs to sell the property or it will likely go into foreclosure.
“I understand the horror show that’s been put in front of us if this doesn’t go through,” said Brooklyn Park Mayor Hollies Winston in a council meeting on Monday, April 21.
The nonprofit aims to sell to MAS Capital Group, a New York-based investment firm.
But, there’s a caveat: Aeon owes the city of Brooklyn Park about $3.8 million.
MAS Capital won’t buy the property unless Brooklyn Park forgives the debt.
Back in March, the Brooklyn Park City Council acting as the Economic Development Authority, voted to forgive the loan, but with two conditions.
First, the council would accept a settlement offer from Aeon’s lender for $450,000.
Second, Brooklyn Park would attempt to obtain a $4 million grant given to Aeon by the U.S. Department of Housing and Urban Development (HUD).
However, Aeon’s lenders have rejected that deal.
That is, lenders are unwilling to offer the $450,000 settlement offer if Brooklyn Park were to receive the $4 million grant.
The sale of the second largest apartment complex in the Twin Cities now hinges on a federal grant being transferred to the city of Brooklyn Park.
Sale Contingent on $4M Federal Grant
With the council unwilling to accept the settlement alone, the deal is now contingent on Brooklyn Park taking ownership of the grant.
“We gave a pretty significant amount — residents want the money back, and I don’t think that the city wants to feel like we’re easily pushed around when it comes to these things,” said Winston. “I don’t think there is a will for people to simply just accept $450,000.”
The council voted 6-0 to make the deal hinge on the grant funds.
Funding from the grant would be reallocated to the Zanewood Community Center remodel project.
Foreclosure Risk
It’s not clear if Brooklyn Park will be able to access Aeon’s federal grant.
“Last week, we got some concerning feedback from HUD … indicating that maybe chances were not very high that we were going to get that $4 million loan,” said Tim Gladhill, Brooklyn Park’s community development director. “We had lots of discussions with HUD. Fast forward to this morning, we did have a better meeting with HUD this morning, who said look, there is a pathway to approval with some additional steps that they’ve provided.”
“We can’t guarantee that we’re going to get that $4 million federal [grant], but indications are that there sill is a pathway to make that happen,” Gladhill added.
With debate on the sale dragging on, it’s possible the lenders could grow impatient and push for a foreclosure sale on the open market.
According to Gladhill, the pending sale to MAS Capital is worth about $30 million. Aeon’s original purchase price for the property was approximately $70 million.
As a result, the lender is expecting to take a significant loss on the property.
MAS Capital has committed to keeping rent affordability covenants in place if it buys the property.
However, in a foreclosure sale, those covenants would be dropped.
That means a new owner could raise rents or otherwise take steps to displace a large number of the estimated 2,500 tenants.
