Northland Expands Territory
When Tarragon Corp.’s bottom line oozed red ink this winter, reporting a $300 million loss and Nasdaq put the firm on notice that it would be delisted, Lawrence Gottesdiener, chairman of Northland Investment Corp., saw an opportunity.
Within three weeks, the Newton, Mass.-based Northland had swooped up six of Tarragon’s apartments and condominiums — five in Florida and one in South Carolina — at a bargain price of $156 million, about half of the $311.3 million Tarragon paid for the properties less than three years ago.
Tarragon owed $157.1 million on the properties, which it had been converting from apartments to condominiums.
Discounting the South Carolina property, Tarragon took a thrashing. For example, Northland paid $21.7 million for 251 unsold units at Via Lugano in Boynton Beach, Fla., which Tarragon had paid $74 million in 2005, a $52 million loss.
‘Contrarian’ Investor
Northland’s investment strategy is somewhat of a maverick. As the housing market and mortgage industry nose-dive, Northland is poised and ready to strike a deal.
A source close to Gottesdiener says that when the real estate market goes south — or ‘contrarian’ — Northland thrives, buying up valuable properties at significant discounts.
“The recent turbulence in the capital markets presents an attractive entry point to increase our Florida presence,” Gottesdiener said in a written statement announcing Northland’s acquisition of six Tarragon properties.
Chuck Coursey, spokesman for Hartford 21, declined to get into specifics regarding Northland’s investment strategies and whether it identifies companies, like Tarragon, suffering financial difficulties that need to unload their properties. The goals are to find properties of value or properties that may be undervalued,” Coursey said.
Southern Opportunities
Florida and southern states have become a particularly intriguing investment option to Northland.
The company now has more than 2,800 units in Florida and South Carolina, and there are more opportunities available for Northland to expand in the south, said Sara Scarborough Graham, Northland’s director of marketing. “There are a lot of second and even third homeowners in Florida,” Graham explained.
“Certainly, with the market being the way it is now, there is a lot of liquidity in the market because of a high concentration of second homeowners. That type of condition makes it a good opportunity for contrarian investors like Northland to increase their presence,” she said.
In addition to Florida and South Carolina, Graham said Northland has identified North Carolina and the area surrounding Memphis, Tenn. as possibilities for expansion as the company already has holdings in both.
“We are particularly interested in the information technology growth markets of Charlotte, Raleigh, and Austin,” Graham said.
Northland is clearly focused on technology markets, evidenced by its decision in July to jettison its five holdings in Houston. At the time, Northland’s chief investment officer David Morency said the company wanted to expand in “growth markets that are underpinned by knowledge-based economies, with high concentrations of students and technology workers.”
Its southern focus doesn’t diminish the company’s focus on New England, Graham added. “We’re going to continue to pursue opportunities in New England just as we have in the past.”
Northland has a $1.7 billion portfolio of roughly 15 million square feet and its major concentration has always been in New England. Its portfolio includes 3.4 million square feet in Greater Hartford, which includes CityPlace I, the Goodwin Hotel and 360 Jewel St., formerly the YMCA. Northland also owns Bigelow Commons in Enfield and The Pavilions in Manchester.
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