Townhouse Condominiums

Cumberland, RI

This townhouse condominium project situated in a popular RI suburb was severely distressed. The former developer had overpaid for the land in a declining market and failed after partially constructing 5 of 35 units. Infrastructure was a mess, and the site’s sewer system was incomplete and discharging raw sewage onto the site. The former developer filed a state court receivership petition to avoid foreclosure, and the ensuing Receiver’s Sale attracted many bidders. Clubhouse Capital was retained by a local developer to spearhead his acquisition of the project from the Receiver. On behalf of its client, Clubhouse negotiated the purchase of the underlying mortgage loans from a failed out-of-state bank. The client was then able to submit a credit bid to acquire the property, effectively boxing out the other bidders given the gap between the outstanding balance and the price Clubhouse negotiated for the loan. Clubhouse’s client finished the site work and the 5 units, selling them within 3 months to recover 100% of his cost. He successfully completed the project and sold all units at significant margins. All project financing was secured by Clubhouse Capital. (Winter 2011)