Atlantic|Pacific Cos. is buying Carlisle Development Group for an undisclosed price—despite an ongoing federal investigation into Carlisle.
“We are excited to welcome a leading affordable housing company to the A|P family,” said Randy Weisburd, COO of Atlantic|Pacific Cos. in a statement. Atlantic|Pacific and Carlisle executives were unavailable for further comment.
The fourth largest affordable housing developer in the U.S., Carlisle started construction on 768 affordable housing units in 2012 and held ownership interests in another 9,300 existing units, according to Affordable Housing Finance. Atlantic|Pacific, based in Bay Harbor Island, Fla., has 23,000 units of housing under management in states including California, Florida, Georgia, North and South Carolina, and Texas.
Carlisle's sale comes at a time when the firm is under investigation. Federal investigators allege that Carlisle and a contractor, BJ&K Construction Services in Fort Lauderdale, Fla., completed numerous affordable housing developments for less than reported and split the resulting profits, according to a May 4 story in The Miami Herald. The investigation began in late 2011 when two senior Carlisle executives quit and gave information to federal investigators, cutting cooperation deals with the FBI, Internal Revenue Service and U.S. Attorney’s Office, said the newspaper. The investigation targets current CEO Matthew Greer and retired CEO and founder Lloyd Boggio, along with a general contractor, Michael K. Runyan, president of BJ&K, according to the Miami Herald, which obtained a copy of a federal subpoena and quotes "sources close to the investigation."
Atlantic|Pacific confirmed this week that it had agreed to purchase the embattled developer.
“Atlantic|Pacific is the perfect fit for our team because they share our long-term vision of empowering local communities to improve themselves” said Greer in a statement. “Their geographic reach and sterling reputation make them ideally suited to grow this great team’s role in the national affordable housing landscape.”
Until recently, Carlisle held a sterling reputation as a leading affordable housing developer. The firm even has a history of completing projects under budget—in a good way. In February 2009, Carlisle proudly revealed that its Tallman Pines development in Deerfield Beach, Fla., cost just $19 million to develop. That's more than $1 million less than estimated on its 2006 application for low-income housing tax credits, made during the height of the condominium boom. Carlisle added green features and cut the amount of loans to Tallman Pines, according to coverage in Affordable Housing Finance.
Ken Naylor, the Carlisle executive who oversaw Tallman Pines, joins Atlantic|Pacific to lead the new incarnation of Carlisle's affordable housing group, A|P Communities. This magazine named Naylor one of its Young Leaders in 2011. Greer will remain as CEO of the diminished Carlisle Development Group.