Two large projects face foreclosure sale dates ! Legacy Building set for Nov. 13, Commerce Park to sell
Posted on Sunday, November 9, 2008
More than a dozen judicial foreclosures are scheduled in Washington County, including two very large ones in Fayetteville — the Legacy Building and the Commerce Park II office building. Just a couple years ago, the developers of these two projects often graced the society section or business pages of local newspapers. Today, these developers face multiple lawsuits and proceedings in bankruptcy court. Washington County Circuit Clerk Bette Stamps said the $ 18. 7 million in debt against the Legacy Building involves the largest foreclosure sale she’s conducted since taking office in 2001. Previous clerks could have handled a bigger one, but she’s not aware of it if they did, Stamps said.
Legacy Building Springdale developer Brandon Barber and his company, Lynnkohn LLC, built The Legacy Building, a 117, 000-square-foot, 37-unit luxury condominium building at 401 Watson St. in Fayetteville.
Eight of the residential units have been sold. A foreclosure sale set in August was postponed after Lynnkohn filed for Chapter 11 bankruptcy protection. The federal court dismissed Lynnkohn’s petition, saying there was no reasonable prospect the company could reorganize.
The foreclosure sale of The Legacy Building by Legacy National Bank is currently set for Nov. 12. It includes the 29 remaining unfinished residential units, along with restaurant and retail space.
Limited parking could impact Legacy’s sales price. The building has a total of 50 parking spaces, including 11 for current residents, six for the restaurant and two handicapped spots. Only 31 parking spots are avail- able for the remaining 29 residential units, officials said.
Commerce Park Fayetteville developer Ben Israel and several investors formed Commerce Park II LLC to own and operate a four-story, 60, 000-square-foot office building at 2049 Joyce Blvd. The top two floors of the building were planned as the future headquarters of Dixie Management & Investment Limited Partnership. After a slowdown in the real estate market, Israel broke his lease contract after he built the office building. With more than half the building vacant, cash flows were inadequate to pay the debt service on about $ 10 million owed to Chambers Bank. A judge approved the foreclosure of the property in August, but a federal lawsuit by investors and bankruptcy filings by Israel and Commerce Park postponed setting a sale date. A settlement was reached after a lengthy federal court battle by 23 lien claimants against the building’s five co-tenant owners and the mortgage’s 18 guarantors. After the bankruptcy court approved the foreclosure, a circuit judge scheduled the foreclosure sale on Commerce Park for Nov. 18 Tom Muccio of Springdale, one of the largest investors in Commerce Park, has filed a lawsuit against Commerce Park seeking to recover $ 1. 03 million that he loaned the limited liability company.
Values unclear Economists and real estate experts said that it’s hard to predict how much these two large commercial properties will sell for at foreclosure with a slumping real estate market and a weak national economy. Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas’ Sam Walton College of Business, said investors with good liquidity can pick up good deals during a slumping real estate market. Deck said she does not know the lender’s strategy, but she suspects the banks will hang on to the properties if they don’t get what they think they are worth. The best potential buyers may be from another part of the country, she said. Steve Fineberg, a real estate agent who specializes in commercial properties, said it’s hard to predict foreclosure sale prices because foreclosure sales attract “ bottom feeders ” looking to buy properties very cheap. Fineberg estimates the fair market value of the office building is in the $ 175 to $ 225 per square foot range. He believes Legacy’s luxury condos are worth about $ 250 to $ 300 per square foot, but he said that the lack of adequate parking could be a big concern to potential buyers. An attorney from central Arkansas offered $ 250 per square foot to buy one of the condo units from the court, while the foreclosure was pending. The sale was denied in part because the buyer wanted two parking spots and the lender only wanted to include one parking space. Jeff Collins, president of Streetsmart Data Services, estimates the fair market value of the condos is about $ 275 to $ 300 per square foot, but he said the parking issues lower the property’s value. Legacy’s value is also impacted because its commercial space was designed for a restaurant that did not take the space, so it may not be configured the way a potential buyer would like, Collins said. He suspects the only bidding on this property will be by the bank. The value of the Commerce Park property is also adversely impacted because the top two floors were built for occupancy by Israel’s companies and may not suit a potential buyer, he said. “ There’s no way to really know what the sales price will be at the courthouse steps, ” Collins said.
Other foreclosures Eleven other judicial foreclosure sales are scheduled. Six sales are set for this week. One of the three foreclosure sales set for Wednesday involves an owner-financed property. These figures do not include non-judicial or statutory foreclosure sales, which are typically for mortgage loans. The number of pending non-judicial sales is typically much higher than judicial sale, but data on the non-judicial sales is not readily available.
FEEDBACK:
Something to say about this topic? Submit a Letter to the Editor online
