New distressed asset fund buys AIG's New Jersey complex

Real Estate Weekly, June 10, 2009

KABR Real Estate Investment Partners, LLC, a new value fund that is buying real estate through the market cycle bottom, has purchased the 235,000 s/f commercial office building at 85 Challenger Road in Ridgefield Park from AIG.

The REO sale was orchestrated by Cushman & Wakefield's Metropolitan Area Capital Markets Group, which noted 17 bids were made on the property.

"AIG made the right decision to return this building to the developer market following its foreclosure," said Cushman & Wakefield's Andrew Merin, who orchestrated the sale with team members Gary Gabriel, David Bernhaut and Jose Cruz. "We received 17 bids on the offering, which generated a highly competitive process, particularly considering the current investment climate."

"The key to this trade was AIG being a realistic seller," Gabriel noted. "Our client is a lender--not in the business of carrying and leasing office buildings. KABR saw this as a great opportunity to purchase a high-quality, well-located property at a mutually agreeable price.

"This is a good start for what could ultimately be a healthy trend," Gabriel continued. "As lenders and owners begin to recognize the reality of the market, it will begin to facilitate the return of a normal ask/ bid sale process, enabling properties to begin actively trading again."

KABR is a newly formed fund, founded by investment partners that include chairman Kenneth Pasternak, former CEO of Knight Trading, which is dedicated to purchasing commercial and residential properties within 150 miles of the New York area.

Terms of the Class A building purchase, brokered by Cushman & Wakefield's Metropolitan Area Capital Markets Group, were not disclosed.

"We are delighted to announce the purchase of 85 Challenger, a terrific Class A office building that came onto the market at the right time for the right price," said Pasternak.

"This marks the first of what we anticipate will be many advantageous investments. As the real estate market evolves, we anticipate building out our portfolio with a great mix of multi-family residential and commercial properties."

The 85 Challenger building, part of the 60-acre Overpeck Centre which sits at the junction of Route 46, I-80 and the NJ Turnpike, has an occupancy rate of more than 90%. The previous owner renovated the lobby with stone flooring, wood wall paneling and designer furniture.

"We've already received a number of tenant inquiries because they know we can provide a better space in a better location at a better value," said Laurence Rappaport, KABR managing partner. "That's exactly what shareholders and CEOs are looking for in this environment."

The mixed-use office park serves as home to such firms as Bank of America, Samsung and AGFA.