A real estate investment trust has taken control of Eleven80, in Newark, the financially troubled apartment tower that once was seen as a model for the type of residential development that could help revive the city’s downtown.
The trust, KBS Strategic Opportunity REIT, announced this week that it acquired the nonperforming mortgage loan for the 37-story building, at 1180 Raymond Blvd. The firm said it acquired the roughly $54.5 million loan for a discounted price of $35 million.
The 317-unit building, a former office tower that had been vacant for years, opened in 2006 as a luxury rental property. The $120 million conversion project by Cogswell Realty Group was the city’s first market-rate apartment building in 40 years.
But despite amenities like a health club, a basketball court and a four-lane bowling alley, the project became mired in financial and legal trouble.
In a news release, KBS said that “as this is a non-performing loan, (the REIT) does not expect to receive repayment of the entire principal balance.”
A major downfall of the project was simply bad timing, said Marjorie Perry, president and CEO of Newark-based MZM Construction & Management. The developer had “just completed it when the market went off the cliff,” she said, noting that the economy plunged into a deep recession in the ensuing years.
That dashed the high hopes that Newark and its stakeholders had for the building.
“It was going to be part of the resurgence,” said Perry, a Newark native whose firm worked on the renovation project at Eleven80. “That was going to be the beacon of light for people to come.”
Four months into his first term as Newark’s mayor, Cory Booker told NJBIZ that projects like Eleven80 were essential to transforming the city’s downtown from a place that “shuts down at about 9 o’clock.”
“We need to create projects like 1180 Raymond Boulevard that become places that draw people to living downtown,” Booker said in a November 2006 interview. “It’s really critical to create a 24-hour living city.”
The Brick City has since seen since a host of high-profile commercial development, and several smaller downtown residential projects are being completed around the Prudential Center. Meanwhile, ground broke last month on the first phase of Teachers Village, a transformative $150 million project that includes housing, retail and charter schools.