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Premier Retail Location in Default

February 16, 2010

Remember the Premier Retail Location by Santana Row we blogged about back in October? Well not surprisingly, the asset is now in default. On the one hand, only big rents can save this thing, but on the other what is the point of marketing it at a ridiculous rent and simply spinning your wheels?

Looking from the outside in, it seems that it would have likely been better to try and get a market rent deal locked and loaded, and then go to your lender with it and hope for salvation.

Anyhow, here’s the nitty gritty. 26,850 SF on ~ 39K SF of dirt and a $8M first, with $279K back, indicating the $8M was likely I/O. If that’s the case, this deal should be a reminder of all the I/O deals which were done.

Ironically, the FDIC has decided to make it a policy to look the other way so long as a lender can get I/O payments. In this case, we’re skeptical that will be possible here.

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Categories: Commercial Finance and Lending | Notable Deals
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broker February 16, 2010

This deal was seller financed. The buyer was going to build high-rise condos. The note holder was the original owner, who won a judgement against Federal Realty to the tune of $11 million (this is being appealed). Add in a buyer that paid at least $2 million down (I think) and paid over $500k per year for like five years, and it is a pretty good deal for the owner.

squarefeet February 16, 2010

agreed – tough deal for the buyer who it seems is also in the process of having his home foreclosed on too…

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