FREMONT — Two Fremont sites mired in a Bay Area real estate fraud case are set to be bought by an affordable homes builder in a deal that may return some cash to investors who federal regulators claim were bilked by the project developer.
The properties are located at 42021 and 41965 Osgood Road near the interchange of Interstate 680 and Washington Boulevard in Fremont, according to documents filed on Nov. 9 with the U.S. District Court.
These Fremont parcels are among numerous properties that were part of the Bay Area real estate empire fashioned by failed developer Sanjeev Acharya and his fraud-linked company Silicon Sage Builders.
The Securities and Exchange Commission has accused both Acharya and Silicon Sage of an array of fraudulent actions that swindled hundreds of investors, many from the South Asian community.
A federal judge has shoved Silicon Sage’s properties into receivership. David Stapleton, the court-appointed receiver, has begun a lengthy process of attempting to salvage value from the collapsed and bankrupt real estate empire by finding buyers for the properties.
Before picking a potential buyer for the Osgood Road site in Fremont, the receiver marketed the property for some months, according to court papers.
“The receiver has accepted an offer from MidPen Housing Corp. to purchase the property for $13.5 million,” documents filed with the federal court in San Francisco show.
Jeff Aguilar, a broker with CBRE, a commercial real estate firm, arranged the purchase deal.
“The buyer has completed due diligence and escrow is holding a deposit of $1 million,” the court papers stated. The sale is to be an “as is, where is” transaction, according to the legal filing.
The previous proposal for the property envisioned the development of 284 units on 3.5 acres at the Osgood Road site.
But it now appears that a new development proposal will be submitted to the city of Fremont.
The CBRE broker solicited bids from several prospective buyers and set a deadline in May of this year for the submission of the bids.
“Seven bids were received, all of them from residential developers intending to re-entitle the property,” according to the court documents.
Nearly all of the potential buyers wanted to be certain that they could win Fremont’s approval of entitlements to develop the property before they completed the purchase of the site. The court records indicate that MidPen Housing was willing to fast-track its acquisition.
“The offer from MidPen Housing was determined to be the best because it was prepared to close quickly, rather than waiting for entitlements,” the legal filings show.
People who invested in the Osgood site could receive millions from the $13.5 million sale of the property after payments are made to different parties.
The principal lender for the property, Osgood Washington Holding Co., is expected to receive $10.3 million from its share of the proceeds. Property taxes total $420,300. The CBRE broker’s commission is $175,000. Closing costs total $67,500.
That should leave slightly more than $2.3 million left over, which could offset at least a portion of the losses suffered by the investors in this specific project.
The receiver also has engineered the sale of three other properties:
— One38 Apartments at 138 Balbach St. in downtown San Jose was sold for $53.5 million to Carmel Partners on Oct. 13.
— On Oct. 15, an office building at 510 S. Mathilda Ave. and an adjacent apartment complex at 518 through 528 S. Mathilda Ave. were bought for $6.45 million.
— On Sept. 29, the office and retail units in the Madison mixed-use development at 1364, 1374 and 1378 El Camino Real in Santa Clara were bought for $2.6 million. Residential condos in the complex weren’t involved in that deal.
MidPen Housing, the prospective new owner of the Fremont properties on Osgood Road, is a veteran nonprofit residential developer. The firm has developed 8,500 homes for low-income families, seniors and special-needs individuals, according to a post on the MidPen website.
“Our work at MidPen is driven by the belief that safe, affordable housing provides the foundation necessary for people to prosper and contribute to their communities,” MidPen states on the website. “There’s nothing more rewarding than providing stable housing that allows people to thrive, not just survive.”