New York City-based investment group ESG Kullen, today announced the sale of the Madison Oaks apartment complex, closing out an investment that has more than doubled its value in six years. The managers said the transaction is further proof of their business model, which is based on acquiring Bulk Condominium interests within fractured condominium properties and converting them into quality, professionally-managed apartment communities.

The sale of Madison Oaks apartments in Palm Harbor to Residential Management for $40,500,000 or $162,000 per unit was $24,550,000 more than ESG Kullen paid for the initial bulk purchase. In 2012, ESG Kullen purchased 205 of the 250 units (82 percent) of the units in what was then called Madison Oaks Condominiums for $16 million or $78,000 per unit. This is the second successful sale ESG Kullen has announced this fall, and the sixth in the past three years within their Bulk Condominium business model. Most recently, in September the firm sold the BelAire Condominiums in Boca Raton, Fla., completing a $128 million project that had begun in 2014.

The Madison Oaks property had been originally built as an apartment complex in 1986. An attempt was made to convert the property into “for sale” condominiums, but by the time the 2008 recession hit, only about half the units had been sold. While there were some owner-occupants in the complex, many units were being rented individually and necessary maintenance was being deferred because reserve funds were insufficient. After ESG Kullen acquired the number of units specified in the Condominium’s declaration, it terminated the condominium 2014, made significant improvements to the individual units and the common spaces, and converted the property back into a quality rental community.

Although there was significant controversy in the news media surrounding the transaction in 2014, ESG Kullen President Eric Granowsky said the change ultimately benefitted everyone, including the individual unit owners who were sometimes compelled into short sales because of the declining values of their properties. “In looking back, owners who were hopelessly upside down in their condominium were given an opportunity to start over with no penalty; millions of dollars in deferred maintenance and capital improvements were completed; and property values have surpassed pre-recession levels. I would say that these are all very positive outcomes for the unit owners, for the neighborhood and for Florida,” said Granowsky.

ESG Kullen remains one of the most active value add investors in Florida. The company currently operates a multifamily portfolio of more than 5,000 units throughout the state.