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1.4Msf real estate portfolio in Marin, Sonoma counties Ponzi scheme sold for $436M

Two San Francisco real estate investors just completed the purchase of the largest portfolio of North Bay commercial real estate in 16 years, moving the unwinding of a Novato-based investment company’s Ponzi scheme into a new chapter.

Hamilton Zanze Real Estate Investments and affiliated firm Graham Street Realty together with New York-based Davidson Kempner Capital Management on Wednesday closed escrow on 60 of upward of 70 properties (PDF property list) that were the backbone of the late Ken Casey’s companies Professional Financial Investors and Professional Investors Security Fund.

The deal price for the more than 1.4 million square feet of commercial and multifamily space in Marin and Sonoma counties was $436.5 million. That includes 935 residential units and about 680,000 square feet of commercial space.

The transaction netted roughly $140 million to the bankruptcy estate, after many of the banks that had senior equity positions on the properties had been paid in full, said Ori Katz, one of the attorneys representing the debtors, in a bankruptcy court virtual hearing Thursday morning.

‘Big, nasty, complicated transaction’

It’s out of the trust account for the estates of the Casey companies that repayment claims to investors who lost money in the fraud would be paid. A handful of sales of real estate not in the portfolio are pending, with escrow closure dates anticipated in January and February, Katz told Judge Hannah Blumenstiel.

“That was a big,…

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