Can't Understand This Deal. Expertise Welcomed.

[Christopher Munn]

BP Community,

I recently came across a deal in Ohio for over 100 units and need some help on it. 

The property is 50% occupied and currently doing about 80k in NOI (Seriously Underperforming). Cap rates in the area can range from 7-9% on average. The property was listed at $3.5M but was just reduced to $3M. I thought this was outrageous but I contacted the broker. The broker said that the owner received over 5 offers including a $2.5M cash offer (that was refused). My numbers say all day that this property is worth less than $1.2M as performing. If performing around 95% occupancy, the property should do about $300k in NOI.

Could anyone help me understand the $2.5M cash offer? 

I know there's a ton of upside on this thing but I obviously shouldn't be paying for value that I will in turn have to create.

I've analyzed a good number of deals and am just baffled by this one. 

Thanks for reading my long post and hope someone can help me make sense of this.