ING defaults on $11.3M loan attached to off-campus apartments

The ownership of some apartment complexes largely rented to UConn and ECSU students may change hands. The current owner defaulted on a loan agreement, allowing a Philadelphia company to purchase the debt.

RRE VIP Borrowers LLC, with offices Philadelphia, Pa. and other locations, purchased the loan, with an outstanding balance of more than $11 million, after ING Real Estate Community Living Fund defaulted.

The loans are attached to Ashford Hills, Clubhouse, Hunting Lodge, Knollwood, Maplewood, Millbrook, Oakridge, OrchardAcres, Perry Hill Estates, Renwood, Ridgeview Heights and Willington Oaks.

RRE VIP was the highest bidder, according to the U. S. Department of Housing and Urban Development, in early October.

Rebecca Fields, executive director for the Mansfield Housing Authority, said the housing authority also bid on the loan in the hopes of converting some of the properties into affordable housing.

Fields said the housing authority bid $4 million, with the money coming from lenders and grants, and not town tax money.

RRE VIP bid $ 9.3 million.

“It would have been a wonder­ful opportunity, but it didn’t work out,” Fields said.

Fields said ING took out roughly $11.4 million in loans for the properties in 2006, and said the remaining balance is in the range of $11.3 million.

RRE VIP’s purchase of the loan does not currently give the company ownership of the properties, Chief Executive Officer Alan Feldman said. The company could work out an agreement that allows ING to maintain ownership of the properties or it could take ownership itself through foreclosure.

Feldman said the company has ownership of both loans and properties throughout the country and RRE VIP would be open to either arrangement.

He also said RRE VIP views the properties as sources of “good, clean student housing” and would not seek to change their current status. “In general, we view this as a student housing asset,” he said.

Posted Nov. 15, 2010