A troubled condo complex in the city of Ann Arbor that never completed its conversion from apartments will have a new owner by year-end.

Woodlands Mews was listed for sale after the lender - originally LaSalle Bank, then Bank of America - took the property through foreclosure on a $31.8 million debt.

Now, said listing agent Mark Rohr of Hendricks & Partners of Birmingham, a buyer is negotiating a purchase agreement after bids were sought through Oct 1.

But it also was a property where the strong positives were balanced with a rare negative: The location and size of the units create opportunity at foreclosure pricing; the condo aspects- described by Rohr as “broken” - make it difficult, if not impossible, to finance.

The entire complex is 306 units - and it formerly was known as Woodland Meadows. It’s located between Ann Arbor-Saline Road and South Main Street, south of Woodland Plaza shopping center.

The property had been owned by Sam Zell’s Equity Residential before Zell decided to exit Michigan in 2005.

A division of Chicago-based Northern Realty Group Ltd. Bought the property from Equity Residential in early 2006.

That deal shows the transition in Ann Arbor’s commercial real estate market.

The purchase price in 2006 was $40.49 million, or $130,000 per unit - the highest per-unit deal recorded in Washtenaw County.

The reason Northern Realty paid that price was its intent to convert the property to condominiums - meaning that the price per unit, normally part of a measure for determining payback on rental income, just set the bar for individual unit sales as condos. They could pay more than market rate for apartments, they said.

The style of units lent themselves to that, the buyers told me at the time: there were 138 townhouses of more than 2,000 square feet with garages, and 168 flats with large floorplans. The setting, 24 acres with a small lake and parkland, was attractive for residents.

And in early 2006, the condo market in Ann Arbor didn’t offer much beneath that $130,000 threshold.

That changed, of course.

As the units in Woodland Meadows were converted into condos and renamed Woodland Mews, many units in many of the buildings found buyers as the rentals “turned over.”

But the market was collapsing and the owner ended up with an effective patchwork among the buildings - some were owned privately, some were still rented - and of those unsold, all were owned by the buyer.

By the time the property went into foreclosure, 73 condos were privately owned. They still are - the buyer of the complex only acquires the 233 unsold units.

There was no advertised pricing for the foreclosure sale - potential buyers submitted bids. Sources say the final purchase price is likely to be in the $16- to $17-million range.

Meanwhile, the condos that sold to individual buyers have fallen in value due to the inability of buyers to get financing for the condos due to the poor fundamentals. While listings have been in the $125,000 range, one is now on the market for under $70,000, the owners likely hoping for cash buyers.

Rohr said the property remains a strong piece of real estate as a rental property for the new owner. The average rental income from the unsold condos was $1,247 per month.

“This will be an excellent opportunity,” Rohr said. “Everyone’s excited about the opportunity to clean this deal up and get it back on track.”

Individual owners of the condos also are likely to value the sale, despite the fact that they’ll own units in what will remain a rental property for quite some time. The property, under the care of a receiver for almost 3 years, didn’t thrive.

The sale, Rohr said, means “that finally someone is going to take care of the place.”

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.<