A brand-new 110-unit apartment building in D.C.’s booming Union Market neighborhood is heading to a foreclosure auction.
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New York-based Ranger Properties delivered The Lanes at Union Market, a block away from the Union Market food hall, in early 2023.
The property is being foreclosed on by the noteholder, Srinivas Chavali, who purchased the nonperforming loan backing the property in January.
EagleBank was the initial lender on a $33.7M construction loan in 2019, which it increased to $39.5M in 2020, according to documents filed with the D.C. Recorder of Deeds.
Ranger Properties didn’t respond to a request for comment by the time of publication.
Chavali, a local investor whose business model consists of buying and selling nonperforming loans, is the one taking it to auction. A foreclosure notice and foreclosure affidavit for the property were filed in D.C. deeds records Wednesday.
The auction is scheduled for May 23 at local auction house Alex Cooper Auctioneers.
Ranger Properties’ construction loan came due in 2023, Chavali told Bisnow in an interview Friday, just as the property was beginning to lease up and before it was stabilized.
He said Ranger purchased the property in 2017, then it took two years to get entitlements. After construction started in 2020, it was held up by pandemic-related delays and burdened by construction cost increases.
“The whole project got delayed,” he said. “It was just bad timing and Covid — one of the Covid victims.”
The property is now 89% leased, with a net operating income of $1.5M as of the end of March, according to the Alex Cooper auction page. The NOI is expected to go up, Chavali said, given that many of the first tenants received rent concessions.
The property has a 1,136 SF UPS store on the ground floor. UPS leased the space in November 2022 for 10 years, according to Alex Cooper. There is also a 2,327 SF vacant ground-floor retail space.
The city’s proposed assessment of the property for fiscal year 2025 is $62.6M.
CBRE Executive Vice President Martha Hastings announced the auction in a LinkedIn post Thursday, calling it a “rare opportunity to acquire a modern 110-unit apartment through a foreclosure auction in the vibrant Union Market neighborhood of Washington, DC.”
