Centre Properties placed three of its 26 retail properties in Chapter 11 protection. Bank of America, the mortgage holder on all three properties, filed foreclosure proceedings in January.
In order to reach an agreement for Indianapolis-based Centre to pay off the debt on the properties, the developer has had ongoing negotiations with the bank, however, was unable to reach agreement because of the bank’s urgency to force repayment of the loans. The filing only affects the three properties that have loans with Bank of America.
The Chapter 11 filing will allow Centre the time needed to refinance the centers and provide full repayment of the loan.
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Both the bank and developer agreed the value of the properties are well in excess of the loan amounts. However, the timing to sell and/or refinance the properties was the issue which led Centre to respond to the foreclosure with the Chapter 11 filings, which prevents the forced sale of the property.
“Unlike many Chapter 11 filings, the creditors here will be paid in full,” said Paul Deignan, attorney for Centre. “Timing of the payoff became the issue on which we could not arrive at an agreement with the bank, which resulted in filing of these cases.”
The original loans from 2005 were never fully funded by the bank and since that time, Centre has made significant principal and interest payments on the loans. In addition to its equity in the three retail centers, Centre has increased its already substantial investment in the properties by funding tenant improvements, engineering, legal and other capital items.
“Unfortunately, with Bank of America withdrawing from the Indianapolis market, it has demanded a payoff of the loans much sooner than we had anticipated” said Craig Johnson, president of Centre Properties. “Centre has always expected to pay off the loans in full; however, the bank’s untimely demand for payment forced us to place these three properties in Chapter 11 to protect our investment.”
“Centre has never filed a Chapter 11 proceeding on any of its 26 shopping centers and did so only as a last resort after negotiations with Bank of America broke down” stated Johnson.
Chapter 11 filings are recent phenomena in the commercial real estate
industry, as real estate developers are using the legal procedure to protect their loans from banks with changing motives.
The following is a separate list of 15 CMBS-related retail properties for which the borrowers sought Chapter 11 bankruptcy protection in the past year.
|Property||Address||Net Rentable SqFt||Cur. Bal.||CMBS; Special Servicer||Update|
|Shops at Boca Park||710, 740, 750 S. Rampart Blvd., Las Vegas, NV||277,472||$51,415,167||BS 2005-PWR7; C-III||Loan modification closed 10/17/2012.|
|Masi Plaza - A & B note||11787 - 11899 Foothill Blvd., Rancho Cucamonga, CA||171,802||$36,841,579||ML-CFC 2006-4; LNR|
|Mi Pueblo Shopping Center||11820 East Valley Blvd., El Monte, CA||101,922||$13,124,089||Deutsche 2006-CD3; C-III|
|15455 West Bell Road||15455 - 15459 W. Bell Road, Surprise, AZ||52,259||$9,676,198||ML-CFC 2007-9; LNR|
|Sahara Town Center||2520-2650 Maryland Pkwy, Las Vegas, NV||98,344||$9,403,950||BofA 2001-3; C-III|
|River Square Center||215 S. 2nd St. & 217 Mary Ave., Waco, TX||92,874||$6,360,727||JPM 2007-CIBC19; LNR|
|200 Edwards||200 North Edwards Blvd., Lake Geneva, WI||50,987||$6,262,772||JPM 2007-CIBC20; C-III||The foreclosure sale was confirmed by the court on 12/20/2012, and the deed was recorded that date.|
|Georgetown Plaza Shopping Center||4873 W. 38th St., Indianapolis, IN||109,800||$5,528,332||GMAC 1998-C2; Berkadia|
|Roswell Fiesta||11235 Alpharetta Highway, Roswell, GA||62,085||$5,458,428||Wach 2006-C23; CWCapital||Receiver appointed on 12/27/2012. Foreclosure was scheduled for early February 2013.|
|Rimrock Plaza||2545 Central Ave., Billings, MT||51,573||$5,265,000||Deutsche 2006-CD3; C-III|
|Square 67 Shopping Center||2550 W. Red Bird Lane, Dallas, TX||182,806||$4,822,118||LB-UBS 2002-C2; LNR|
|Shopko Plaza||1604-1774 Appleton Road, Menasha, WI||89,589||$4,146,551||BofA 2001-3; C-III|
|Main Retail Center||2050 S. Stoughton Road, Madison, WI||49,270||$3,539,535||CMLT 2008-LS1; LNR|
|Lauderhill Center||6440 W. Commercial Blvd., Lauderhill, FL||19,493||$2,931,014||BS 2006-PWR14; C-III|
|Shoppes at Central Park||1251 Carl D. Silver Pkwy, Fredericksburg, VA||9,887||$2,620,097||MS 2006-T23; C-III||Receiver was to take over in January 2013.|
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