A 280-unit Quincy apartment tower that touched off a three-year federal lawsuit on the reasons for its poor leasing performance during the housing collapse has been acquired for $89.5 million by Gerding Edlen, a Portland, Oregon-based developer.
The seller, Northwestern Mutual Life Insurance, acquired the 12-story complex at 2 Hancock St. from the original developer, Stoughton-based Conroy Development, for $75.6 million in December 2007.
Conroy affiliate Neponset Landing Corp. sued Northwestern Mutual in 2010 for breach of contract. It argued that the insurer owed $1.1 million in an “earnout” payment reflecting the property’s net operating income from June to November 2009 under the terms of the post-closing obligations in the April 2006 purchase-and-sale agreement.
The lawsuit said Northwestern mismanaged the property by holding units off the market and failed to develop an effective marketing strategy. As a result, the property’s net operating income dipped 28 percent below budget, the suit stated.
Northwestern fired back with a counterclaim against Neponset Landing Corp. and Terence Conroy Sr., who had signed a personal guaranty, in 2011.
The Milwaukee-based insurer claimed Conroy owed $255,061 in expense reimbursements that incurred in late 2009, including broker commissions to lease the apartments, property taxes and credits for rent collected during Conroy’s ownership.
Attorneys for Northwestern Mutual attributed the property’s poor financial performance to the housing market downturn and construction defects in the property, including sinkholes in the parking garage and a deficient HVAC system.
At a 2013 trial in U.S. District Court, a jury rejected Conroy’s claims and ordered him to pay Northwestern Mutual a judgment of $84,205 plus interest and fees, which came to $138,466.
The property consists of 280 apartments, including 100 one-bedroom, 42 one-bedroom with dens, 119 two-bedroom units and 19 two-bedroom with dens with an average size of 944 square feet.
CBRE/New England’s Simon Butler and Biria St. John represented the seller in this week’s transaction and procured the buyer.
Gerding Edlen recently cut the ribbon on The Eddy, a 258-unit apartment tower at 10 New St. on the East Boston waterfront and previously developed 315 on A, an apartment tower in Fort Point containing 202 units.
