200,000 sf Class A Phase I Office Building Development
Situation: This workout involved a construction loan to develop a four-phase office park. The principals filed for personal bankruptcy with only the first phase completed and three parcels of excess land left undeveloped.
Strategy: Our strategy included foreclosure, bankruptcy and disposition. We initiated foreclosure of the recently completed three-story, 20%-leased, phase I office building. We then negotiated a consensual foreclose with two Chapter 11 bankruptcy trustees. After we obtained title, we engaged separate firms for property management, marketing and leasing. We successfully leased the building over a two-year period. Additionally, we retained local counsel and development professionals to retain the development approvals for the remaining three phases.
Resolution: Rather than liquidate the project, the business plan included a complete lease-up of the building and sale at stabilization in order to maximize recovery.
Fifteen-Story 145,000 sf Class B Office Building
Situation: Due to increased property vacancy and a decline in rental rates this loan fell into default.
Strategy: We successfully managed this assignment by negotiating a consensual foreclosure with the developer after the court appointed a receiver to collect rent. Thereafter, we engaged a contractor to complete property improvements and hired a major leasing and management firm to increase occupancy. After partial lease-up the property was sold to an investor with financing provided.
Resolution: The sale prior to stabilization represented the best exit strategy for the successful resolution of this asset.
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