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1.4Msf real estate portfolio in Marin, Sonoma counties Ponzi scheme sold for $436M – North Bay Business Journal

Two San Francisco real estate investors just completed the purchase of the largest portfolio of North Bay commercial real estate in 16 years, moving the unwinding of a Novato-based investment company’s Ponzi scheme into a new chapter.

Hamilton Zanze Real Estate Investments and affiliated firm Graham Street Realty together with New York-based Davidson Kempner Capital Management on Wednesday closed escrow on 60 of upward of 70 properties (PDF property list) that were the backbone of the late Ken Casey’s companies Professional Financial Investors and Professional Investors Security Fund.

The deal price for the more than 1.4 million square feet of commercial and multifamily space in Marin and Sonoma counties was $436.5 million. That includes 935 residential units and about 680,000 square feet of commercial space.

The transaction netted $140 million to the bankruptcy estate, after many of the banks that had senior equity positions on the properties had been paid in full, said Ori Katz, one of the attorneys representing the debtors, to Bankruptcy Court Judge Hannah Blumenstiel at a virtual hearing Thursday morning on professional fees.

As the Business Journal reported, Hamilton Zanze emerged as the lead bidder on the portfolio, and the deal was approved by a bankruptcy court judge in San Francisco in September.

Casey’s companies were forced into Chapter 11 reorganization in mid-2020 after private and Securities & Exchange Commission audits following his death that May detected the skimming of $330 million dollars from about 1,300 investors.

“We look forward to investing over $50 million of capital into these properties, which are located in our own communities,” said Ashlee Cabeal, chief financial officer of Hamilton Zanze, said in the Thursday announcement of the completion of the deal.

Over half the planned capital investments in the properties will be targeted to the apartment properties, the company said. Many of its employees and executives live in Marin County.

The buyers picked Mission Rock Residential to manage the multifamily assets and Paramount Property Company to oversee the commercial office buildings.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

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