[caption id="attachment_51161" align="alignright" width="400" caption="The new owner of Greenbriar Apartments plans upgrades to exteriors, interiors and common areas. (Keegan & Coppin photo)"][/caption]

PETALUMA -- After a several-month effort to reach a purchase agreement with three lenders on the parts of a 224-unit Petaluma apartment complex involved in the Bijan Madjilessi bankruptcy, a significant California multifamily investor purchased Greenbriar Apartments and has a "substantial renovation budget" for maintenance and upgrades.

Capital Valley Investments (www.capitalvalleyinvestments.com), which has offices in Calabasas and Rocklin, acquired Greenbriar in January for $21.9 million, or nearly $98,000 a unit. Seventy-two units vacant at the time of sale were "down," an industry term for units needing rehabilitation before new tenants can move in, according to Jim Roberts, vice president of acquisitions.

"Fifty units were uninhabitable, and 22 were completely destroyed," he said. "The property is shot."

So over the next 12 to 18 months, the company plans to spend millions of dollars completely redoing the building exteriors -- windows, roof and siding -- constructing a new clubhouse and leasing office and overhauling the interiors with new appliances and temperature-control systems.

An affiliated general contractor, Rocklin-based GALA Construction, will be overseeing the project. Capital Valley now has a portfolio of 7,500 units, including nearly 6,000 in Northern California. Both companies have renovated more than 20,000 units over time, according to Mr.Roberts. A major investor in Capital Valley in the purchase of more than 10,000 units is Ezralow Co. LLC of Calabasas.

That includes Capital Valley's first North Bay investment, the 2003 purchase of 138-unit Vineyard Terrace apartment complex, formerly known as Stonehouse, located off Soscol Avenue in Napa. The property had been owned by Ed Keith and needed $6 million in renovations, taking the walls back to the studs to fix mold and other issues.

Mr. Keith was a major Napa Valley property owner who owned more than 500 apartments before selling them in the years after a 2000 city of Napa citation for code violations related to upkeep, according to the Napa Valley Register.

"The two properties we've taken on in the North Bay have been complete renovation projects," Mr. Roberts said.

For almost all property management, Capital Valley uses Dallas-based Riverstone Residential Group, which has a Northern California regional office in Rocklin.

While renovating Greenbriar will be a major effort, closing escrow on the property was a huge challenge in itself, according to people involved in the deal.

"It was the most challenging deal I've ever been involved with," Mr. Roberts said.

Mr. Madjilessi had the property divided the 28 Greenbriar buildings and the common areas into 30 parcels held by nine limited liability companies and accumulated $48 million in loans from several lenders, according to the Santa Rosa Press Democrat.

After a number of bank failures and foreclosures, the properties ended up in the portfolios of three lenders, Westamerica Bank, which had acquired the assets of original lender Sonoma Valley Bank, U.S. Bank and a Southern California venture fund, according to real estate sources. U.S. Bank foreclosed on notes for 22 of the Greenbriar buildings early last year, Westamerica foreclosed on loans for six of the buildings last summer, and three of the U.S. Bank buildings were in dispute because of subordinate debt from Westamerica. And the venture fund was pursuing a quiet title legal action related to access to the buildings.

Capital Valley went into escrow in October and finally came to an agreement between all the lenders to transfer title on the day of closing, according to Mr. Roberts.

"Originally, it was supposed to be seven weeks in escrow, but it took much longer because of the lawsuits to settle and acquisition of the Westamerica units and common area," said Tom Laugero, a partner with commercial real estate brokerage Keegan & Coppin and representing U.S. Bank.

Brad Pennington of Marcus & Millichap represented Capital Valley in the purchase, which was financed by City National Bank of Beverly Hills.