Marquette Moves To Buy West End Condos
By Laura Elder
The Dailey News
The Club of the Isle, a 264-unit condominium complex on the West End, is under contract to a Chicago-based real estate firm with substantial holdings on the island.
Marquette Land Investments, a subsidiary of privately held The Marquette Cos., is negotiating with Bank of America to buy The Club of the Isle, 3433 Cove View Blvd.
Bank of America took possession of the complex in September after its owner, Club Lodgings LP, defaulted on what court documents state was a $35.9 million loan.
The acquisition, however, isn't a sure thing, said Darren Sloniger, managing partner of Marquette Land Investments.
"We're doing our due diligence," Sloniger said.
Still, Marquette's interest in the complex, which originally began as luxury apartments before being converted to condominiums, is another signal that investors are betting on a real estate rebound on the island.
Hurricane Ike, which struck Sept. 13, and a national credit crunch and ensuing recession have been a major drag on the real estate market. But tough times wonít last forever, Sloniger said.
"The storm and economy are temporary setbacks; the long-term viability of the island is very strong," Sloniger said.
Houston developer Charparral Group build Club of the Isle in 2003 as a luxury apartment complex, one of several designed to meet a growing demand by affluent consumers in a boom time for the island.
In 2006 Charparral Group sold the property to Club Lodgings, which converted the complex into condominiums.
Only a "handful" of tenants own their units. The rest are renters, Sloniger said.
Should Marquette acquire the property, the real estate firm would market it as an apartment complex, Sloniger said. One arm of the Marquette manages more than 10,000 apartment units across the nation.
"It has to work for us as an apartment complex," he said. Investor interest in the islandís apartment and condominium scene is driven by bargain prices as lenders take properties or owners want to shake off debt.
Several multi-home island properties, including those damaged by Hurricane Ike, are trading hands.
A Kansas City-based group of investors purchased Ashton Place, 6904 Lasker Drive, and Villa Marina, 210 The Strand downtown, to name only two.
Marquette Land Investments is best known for paying a reported, but unconfirmed, $33 million three years ago for about 1,050 acres that was long part of the Chapoton Ranch, about three miles from Club of the Isle.
Marquette envisions a master-planned community with 4,000 single family homes and condominiums, an 18-hole golf course, a marina and a 15-story hotel on the tract.
The ranch land, between 8 Mile and 11 Mile roads, is the largest undeveloped parcel remaining on the West End. Marquette's master plan for the tract has ignited a furor about its environmental implications and effects on traffic.
Plans for the massive project include setting aside 361 acres for a permanent reserve. But some residents and environmentalists, who oppose the project's size and density, arenít appeased.
Large developments on the island often are met with resistance from would-be neighbors, stringent codes and federal and state regulations when coastal ecosystems are at stake.
While it may seem counterintuitive, all the hurdles and scarcity of available land on the island increases Galveston's appeal, Sloniger said.
Developers are less likely to move in next door with a competing project, he said.
"Strong barriers make it a pretty desirable place," he said.
Copyright © 2009 The Galveston County Daily News