Foreclosure results in new management at Ypsilanti Township's troubled Tuscan Creek
The recent mortgage foreclosure of a 300-unit Ypsilanti Township apartment complex promises a number of changes at the property.
A building damaged by fire in 2009 will soon be demolished. The potholes along the private drive will be filled in. Every unit will be evaluated for necessary upgrades. And tenants who don’t meet leasing standards will be evicted.
Those tasks are at the top of the to-do list of Ann Arbor-based McKinley Inc., which took over management of Tuscan Creek on Aug. 16.
The foreclosure gives New York-based owner Normandy Holdings six months to redeem the property.
But in the meantime, Capmark replaced the property manager, KMG Prestige of Mt. Pleasant, with McKinley’s team. The company - known locally for its owned apartment portfolio - has grown into a 20-state management company for institutional clients like Capmark.
At Tuscan Creek, the company has spent its first days on site making plans for the future of the property, said Jason Tink, asset resolution specialist for McKinley.
The goal, he said, “is to create real value there.”
The onsite management team has been replaced, and the apartment is moving into the local McKinley marketing platform.
Accomplishing value growth will also involve the community, Tink said. McKinley’s staff already has met with Ypsilanti Township and Washtenaw County Sheriff’s Department officials regarding issues at the property.
One concern has been the lack of action on the 36-unit fire-damaged building on the south end of the property. Its entrance is located off of Congress Street between Mansfield and Hewitt, but the southern end is visible from Michigan Avenue.
“That building will be coming down,” Tink said. Bidding on the demolition is under way, he added, and he expects to have a contractor in place by mid-September.
A unit-by-unit evaluation also is under way, he said, to bring each apartment up to “market ready” condition.
On the tenant side, the company also is evaluating existing leases and whether tenants have been meeting their obligations. Some eviction proceedings have begun, Tink said.
Moving forward, the property’s occupancy is likely to dip from its current 60 percent to about 50 percent. That’s contrary to national apartment trends, which are seeing occupancy rise.
But that’s a short-term situation, Tink said, as the repositioning takes hold. Over time, the property should rebuild its reputation - damaged by the poor condition of the property and criminal activity on the premises - and the occupancy will follow.
The fundamentals of Tuscan Creek are sound, Tink added. The unit sizes are large, and the pricing of up to $549 for a two-bedroom unit fits the market.
Soon, Tink said, the property may also have a new name. It had been Cobble Creek for many years, before being renamed Tuscan Creek.
Nationally, commercial foreclosures remain a concern for the economy and lenders. And this area joins the rest of the country in seeing the damage from the wave of residential foreclosures.
But watching these steps taken at this distressed property signal that the Tuscan Creek foreclosure may be its best-case scenario.
Unclear so far is how much the rebranding and capital improvements will cost at Tuscan Creek.
But letting a property fall into brand stigma and disrepair comes at a cost, too. Adding value for residents and working with the community to make the property an asset to the township instead of a concern will end up creating value for everyone involved.