Mezzanine loan foreclosure activity surveyed by CoStar in recent weeks includes the following:
- Fortress Investment Group bought Sheffield57, a condo project in New York City developed by Kent Swig, for $20 million in a mezzanine foreclosure auction last month. Credit Suisse First Boston filed a default on the $400 million first mortgage in April and Guggenheim Structured Real Estate Partners LLC followed suit on a $240 million mezz loan the following month.
- SL Green Realty Corp. (NYSE: SLG) said last week that 100 Church St., a 21-story office in Lower Manhattan, is on the market and slated for an Oct. 15 auction. The New York REIT alleged that owner The Sapir Organization failed to make payments on an $85 million mezzanine loan provided by SL Green and Gramercy Capital. SL Green has taken over management and leasing of the building.
- Wachovia Bank (now Wells Fargo) filed a foreclosure lawsuit Aug. 18 against BentleyForbes Holdings and BF Las Olas, developers of the Las Olas Center in Fort Lauderdale, FL, which consists of two Class A office towers totaling 415,000 square feet, 52,000 square feet of retail and parking space. BentleyForbes bought the property in 2007 for $230.9 million, a record South Florida price of nearly $500 per square foot. Wachovia, representing a group of lenders, provided a $166 million first mortgage and a $49.4 million mezz loan.
- Mezzanine lenders in Terranea Resort, a $480 million oceanfront project in Rancho Palos Verdes, CA, filed a notice of default Aug. 11 on a $110 million loan to Terranea owner Long Point Development Partners. the Building Union Investment and Local Development Fund of America Trust, of Detroit
- Detroit-based Building Union Investment and Local Development Fund of America Trust (Build) carried out a foreclosure sale of 104 acres in Cornelius, NC, where Cornelius Bromont LLC planned to build the $515 million Augustalee mixed-use project. Cornelius Bromont filed a lawsuit against Build last week seeking damages over the decision to foreclose on the project, which the Build funds described as being in a state of "technical default." Build said it acquired membership interests in four limited-liability companies that control the property and will work with the developer, the city and senior lender Fifth Third Bank on a plan to move Augustalee forward.
- Citigroup seized the luxury 400-room St. Regis Monarch Beach Resort in Dana Point, CA, after owners Farallon Capital Management LLC and Makar Properties fell into default on a $70 million mezzanine loan. Citi scrapped a foreclosure auction after it became clear there would be no serious bidders.
- In June, Bahrain-based Investcorp acquired a senior mortgage loan, a B-note for a senior mortgage and two mezzanine loans, all secured by U.S. commercial property assets, for a "discounted" $170.9 million. An office headquarters building in Washington, DC secured the senior mortgage loan. The two mezzanine loans, secured by office buildings in New York and Los Angeles, were acquired from a private investor. The B-note of a senior mortgage was secured by four self-storage facilities located in the boroughs of New York, and was purchased from a major commercial bank.
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