The Monterey: A Condo Odyssey Ends

The Monterey, which once threatened to add 432 condo units in North Bethesda, has been passed on to a fourth owner this week, to a team comprised of DC-based Federal Capital Partners and New York-based Angelo, Gordon & Co. The team purchased the site for $97 million, or roughly $225,000 per unit, from CBRE Realty Finance.

The 550,000-s.f. building, originally dating from the '60s as the Pavilion Apartments, underwent a condo conversion and began selling units in early 2006, under the leadership of Annapolis-based Triton Real Estate Partners, which purchased the 16-story property in 2005. But in 2007, before having settled any of the condominium sales, Triton defaulted on their loan and CBRE obtained full ownership. After getting the 40-something condo buyers to relinquish their contracts, CBRE's Paul Martin told DCMud last December that his plan was to position the building as a rental property and eventually sell it.

Now, with the title in hand, Federal Capital Partners is planning to complete the unfinished renovation work that Triton began in its attempt to pitch the building as a condo, and convert the building back to apartments. Triton's addition of granite countertops, hardwood floors and stainless steel appliances obviously weren't enough, so FCP and Angelo Gordon, plan to "re-establish The Monterey as the premier Class-A apartment community on Rockville Pike." Prices initially ranged from the low $300's to the mid $800's, and together with the planned facade renovation reportedly drove the price tag of the whole project up to $45m the last time around. In its current incarnation, the new owners will add a slew of "luxury" finishes, including upgrades to common areas and a host of other "Class A amenities." The developers plan to finish within a year. “The Monterey is an outstanding asset in a proven location. Access to capital and experience repositioning high-rise apartments allowed us to structure a deal that appealed to the senior lender, the mezzanine lender, and contractors left stranded by a failed condo conversion. It helped that none of the apartments ever sold as condominiums and that a substantial part of the property was renovated to Class-A condo standards," said Lacy Rice, a partner at FCP. 

North Bethesda real estate development news

Monterey's Metamorphosis Ends Where it Began

The Monterey, a 434-unit condo-conversion project developed by Annapolis-based Triton Real Estate Partners, is officially being re-converted back to apartments. The project, located at 5901 Montrose Road in North Bethesda, was originally stalled when Triton defaulted on their mezzanine loan and CBRE Realty Finance became full owner. Triton did begin selling condos in March of 2006 before defaulting, hawking one-bedroom units from the low $300s and three-bedroom units up to the mid $800s, but now CBRE is releasing contract owners from their obligations and refunding deposits, rescinding just over 40 of Triton's contracts-to-purchase in the months to come in an effort to facilitate the property's eventual sale on the open market.

"After substantial analysis of the marketplace and viability of the condo market right now, it was determined that the property is most suited to the rental market," said Paul Martin, Executive Vice President of Portfolio and CDO Management at CBRE. "We've revalued our interest in the property, and determined that the best course of action is for CBRE to sell."

This particular property has changed hands three times in only two years. It originally began as the 432-unit Pavilion Apartment building, owned by Home Properties LLC. Triton purchased it from Home Properties in November, 2005, much to the dismay of the Pavilion's tenants, and reportedly planned to spend $45 million on renovation efforts for the newly christened Monterey condominiums (concept pictured). CBRE assumed its role as full owner of the project in May of 2007 when Triton was foreclosed on, both at the Monterey and at a second condo conversion project, the Rodgers Forge in Towson.

The fate of the 16-story, three-tower complex will ultimately be an upscale apartment community; the north tower currently has more than 50 units that are completely gutted, remnants of Triton's unfinished business, along with 143 units that need minor refurbishment. The south tower holds 228 units that are nearly-completed condo units, which will be going for much higher rates since they provide upgrades like granite counter-tops, hardwood floors and other indicia of condo conversion that the aforementioned units lack.