1.4Msf real estate portfolio in Marin, Sonoma counties Ponzi scheme sold for $436M

Two San Francisco real estate investors just completed the purchase of the largest commercial property portfolio in North Bay in 16 years and started a new chapter in winding up the Ponzi program of a Novato-based investment company.

Hamilton Zanze Real Estate Investments and its affiliate Graham Street Realty, together with New York-based Davidson Kempner Capital Management, closed the escrow account for 60 of over 70 properties (PDF property list) that make up the backbone of the late Ken Casey’s businesses were professional financial investors and security funds for professional investors.

The sales price for the 1.4 million square foot commercial and apartment buildings in the Marin and Sonoma counties was $ 436.5 million. This includes 935 residential units and around 680,000 square meters of commercial space.

The transaction added $ 140 million to the bankruptcy estate after many of the banks that had senior equity positions on the properties were paid in full, Ori Katz, one of the lawyers representing the debtors, told bankruptcy judge Hannah Flower stalk at a virtual Thursday morning hearing on fees.

The Business Journal reported that Hamilton Zanze emerged as the prime bidder for the portfolio and the deal was approved by a bankruptcy court in San Francisco in September.

Casey’s company was forced into a Chapter 11 reorganization in mid-2020 after private audits and examinations by the Securities & Exchange Commission after his death in May found that $ 330 million had been siphoned off about 1,300 investors.

“We look forward to investing over $ 50 million in capital in these properties, which are located in our own communities,” said Ashlee Cabeal, Chief Financial Officer of Hamilton Zanze, in announcing the completion of the transaction on Thursday.

The company announced that more than half of the planned capital investments in the properties will be aimed at residential properties. Many of its employees and managers live in Marin County.

The buyers selected Mission Rock Residential to manage the multi-family property and Paramount Property Company to oversee the commercial office buildings.

Jeff Quackenbush covers wine, construction, and real estate. Prior to the Business Journal, he wrote for the Bay City News Service in San Francisco. He graduated from Walla Walla University. Reach him at [email protected] or 707-521-4256.