Almost three months after an auction was supposed to decide the fate of a chunk of Richmond real estate, new bidders are continuing to come out of the woodwork.
Yet another buyer has stepped forward as the high bidder for imprisoned former developer Billy G. Jefferson’s two real estate portfolios, River City Renaissance and River City Renaissance III, consisting of 29 apartment buildings with 440 units throughout the Fan and Museum District.
The Davis Cos., operating as DIV River City Renaissance LLC, has placed a $37.35 million bid on the two portfolios, knocking out another potential buyer, Bellona Arsenal Farm Associates, which had previously held the highest bid for RCR III.
A Boston-based real estate investment firm, Davis is prepared to pay $30.825 million for RCR and $6.525 million for RCR III, which alone consists of six buildings.
That total offer is more than $500,000 higher than the original credit bid by U.S. Bank, the noteholder on the properties, at a highly anticipated December auction.
The bid offered for RCR III is about $100,000 more than what Bellona Arsenal placed last month.
And Davis just barely beat out yet another high bidder right before a federal bankruptcy hearing Thursday. Neighborhood Properties, a Charlottesville real estate investment firm, had made an offer of $37.15 million, $200,000 shy of Davis’ bid.
Neighborhood Properties has since agreed to be the back-up bidder, Spotts Fain attorney Robert Chappell, who is representing RCR, told Judge Keith Phillips during the hearing.
“This really looks like what we had hoped we’d have in December,” Chappell said.
The RCR representatives will still be able to market the properties and accept additional bids until April 13. The final sales would be approved at a hearing on April 20.
According to the terms of the agreement, Davis will have a one-day due diligence period before paying a $750,000 deposit. After 21 days, Davis will pay another deposit of more than $3 million, or 10 percent of the total purchase price.
The process has been back and forth for several months, and conversations in the courtroom Thursday at time became heated.
Objections came from a third party, Federal Capital Partners, a real estate investment company based in Chevy Chase, Maryland, that had also made an offer on the properties.
Linowes and Blocher lawyer Gabrielle Duvall, representing the Maryland firm, criticized the bid incentives included in the agreements, particularly overbids and break-up fees, accusing the debtors of auctioning off the stalking-horse position.
Duvall argued that FCP, which had made an offer that was rejected, has already served as the de facto stalking-horse bidder throughout the entire process. She said paying overbids and break-up fees to other firms would be equivalent to rewarding these new bidders for riding FCP’s coattails.
“We want a fair and competitive bidding process,” Duvall told Phillips. “This sale process has become somewhat tortured.”
Duvall said FCP would be able to make a higher, stronger counter-offer after an investment committee meeting Monday. Chappell replied that FCP technically does not have an offer on the table, just a possibility.
“Do you want to object with your lawyer or object with your wallet?” Chappell said.
The auction arrangements call for back-up fees to the stalking-horse bidders in the event of higher offers. Davis is set to get $125,000 if it were to be outbid before April 13, and Bellona Arsenal should get $25,000.