The wave of foreclosure in South Florida continues to gain momentum as two more prominent residential projects are facing the possibility of being added on REO property listings.
Lenders have filed foreclosure actions against residential projects: a Delray Beach condominium and marina development and Country Lake at Palm Beach rental complex.
A $17.8 million foreclosure action has been filed on the Delray Beach Yacht Club project while Country Lake was slapped with a $19.5 million lawsuit.
The Yacht Club is a limited liability partnership spearheaded by real estate and development firm David Hocker and Associates. The partnership paid about $25 million for the three-acre project site in January 2006. The project was approved to have condominiums and a 46-boat dockage.
The acquisition of the project site was funded by Orion Bank through a loan of almost $18.75 that was taken out in August 2007. The maturity date of the loan was extended three times by Orion Bank in an effort to avoid placing the project on REO property listings. After the loan reached its November 2008 due the bank granted another extension.
CB Richard Ellis multifamily broker Robert Given said that the project ran out of time to resolve the mortgage problem. He added that the residential project is worth less than 50 percent of its purchase price in 2006.
Meanwhile, the Atherton-Newport-managed fund owns the Country Lake property. Atherton manages funds supported by investors and entered the real estate business through the apartment market three years ago. It acquired several multifamily properties across the United States before it filed a Chapter 11 bankruptcy protection in California in 2008.
According to Joseph A. Eisenberg, Atherton’s bankruptcy lawyer, the fund management firm is negotiating with a potential equity investor to purchase the Country Lake property to protect it from REO property listings.
Majority of properties under Atherton’s portfolio are owned by limited-liability companies not party in any bankruptcy action filed by the parent company. And lenders are pursuing theses properties to be placed on REO property listings.
The foreclosure action against Country Lake was filed by PA Country Lake which acquired the loan for the Palm Beach property from NRFC WA Holdings Inc..
Atherton acquired the Country Lake apartment project, which is now facing the possibility of being added on REO property listings, for $86,000 per unit for a total of $16.5 million.
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