C-III Capital Partners, the loan servicer handling the property since the owner defaulted on an $80 million mortgage, canceled the auction yesterday conducted online by Auction.com. The final bid was $25 million, compared with an appraisal of $56.6 million in January 2011, according to Nomura Holdings Inc. The property was estimated to be worth $210 million in 2007, according to data compiled by Bloomberg. “There was a kind of a macabre fascination,” said Lea Overby, a debt strategist at Nomura. “People were surprised the bids were coming in so low. People had it in their heads that it was going to come in closer to the appraised value.” ...That level would cause a principal hit to the AJ. Who has two thumbs and doesn't own that AJ?
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It's almost as if the special didn't realize that auctions typically result in an 80% loss severity. The loss at the high bid would have been 85%. Hanging onto the asset will probably make that equal or worse.
Quick update on this: the new special servicer has determined that the property needs tens of millions in repairs. Latest appraisal was $11mm. If the special can get the property condemned, that would be fantastic for the deal and would let them focus on the new trouble child, Two Buckhead Plaza.
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