It took nearly five months and plenty of legal wrangling for an imprisoned local landlord’s real estate holdings to finally land a new owner.
The sale of Billy G. Jefferson Jr.’s River City Renaissance portfolios, consisting of 29 apartment buildings and 440 units throughout the Fan and Museum District, was approved Monday at a hearing in Richmond federal bankruptcy court.
The Boston-based Davis Cos. is the buyer and will pay a total of $37.35 million for the holdings of River City Renaissance and River City Renaissance III, both of which have been in Chapter 11 bankruptcy since last summer as Jefferson was awaiting sentencing for a historic tax credit scam.
The company is expected to formally close on the purchase of the properties by April 30, unless other objections arise.
Jonathan Davis, CEO of Davis Cos., said this is the firm’s first foray into the Richmond market. The company was founded in 1976 and owns real estate along the East Coast and as far west as Chicago.
Here in Richmond, Davis said the company plans to “systematically make improvements” to Jefferson’s former holdings, which are all in various states of disrepair.
“The worst things about the neighborhoods in which these properties are located are these properties,” Davis said.
He said the properties are old but “well-located and have an intrinsic charm.” The company plans to bring them up to a quality standard, Davis said.
Work will take place within the next year, he added, but the entire renovation process could take between 18 and 24 months. The properties have a 30 percent vacancy rate, which may make the renovation process easier, Davis said.
It is too early to say how much the renovations will cost, he said. The company is still in the process of choosing a company to manage its new Richmond properties.
The Davis Cos.’ winning bid of $37.35 million is about $500,000 more than the credit bid offered by U.S. Bank at an initial auction of the properties in December. U.S. Bank was the high bidder at that auction and is also the largest creditor of the RCR entities.
RCR then fought to resolicit the market for more offers, and U.S. Bank eventually agreed to step aside and let the second sale process play out.The Davis Cos. did not bid at the December auction for a variety of reasons, said Quentin Reynolds, a managing director with the firm.
But Reynolds, who grew up in the Fan, said the company had been monitoring the bankruptcy proceedings ever since and that the timing worked out better to step in with a high bid now.
He added that these properties were likely difficult to sell due to their scattered locations and because maintenance had been deferred on them for so long.
“This was a unique opportunity,” Reynolds said.
While Davis Cos. was victorious, U.S. Bank walks away with some assurance that it will be repaid on the RCR loans. A federal judge on Monday approved a settlement between RCR and the bank, ensuring the creditor gets $37.1 million from the sale. That leaves $250,000 for the RCR bankruptcy estate.
Jefferson was ordered to pay $9 million in damages for his multimillion-dollar tax credit scheme. He is currently in prison and was most recently appealing his 20-year sentence.
Jack Martin, a lawyer with Hunton & Williams, said Jefferson has already paid off a large chunk of that restitution.
“We are pleased that additional funds may be available to add to the over $2.5 million Mr. Jefferson has already paid in restitution and forfeiture,” Martin said in an email.