The home of Allston’s Urban Outfitters is scheduled to head to the auction block, after the construction loan on 226 Harvard Ave. matured without replacement debt.
"It’s in foreclosure," said Gunnar Branson, spokesman for Chicago-based lenders Wrightwood Capital.
Wrightwood had no further comment, citing the ongoing foreclosure proceedings. The lender has retained Paul E. Saperstein Auctioneers to dispose of the asset, and set a Sept. 16 auction date.
In 2007, a development group led by New York-based MJR Group acquired the building site, a former gas station, for $2.5 million. The developers broke ground on the three-story, 30,000-square-foot speculative building with $6.7 million in financing from Wrightwood. The property is currently leased to Urban Outfitters and Petco; 11,000 square feet of office space remains available.
"Ownership is looking to get an extension, work out the loan and recapitalize the deal," said Jason Weissman, founder and principal of Boston Realty Advisors. "There is the cash flow to do it."
Weissman’s firm is the building’s broker, and is also a limited partner in the development.
Because of upheaval in the capital markets and drastic downward movement in real estate values, many investors who are able to meet their monthly interest payments are finding when their mortgages come due, they’re unable to pay off or refinance their loans.
Lenders are lending less money than they were at the market’s peak, and values are down in absolute terms. That combination has been leaving investors with a large gap between the value of their maturing mortgages, and what they’re able to borrow in a refinancing.
It’s a problem affecting landlords large and small. In June, Banker & Tradesman reported the owners of Cross Point Towers in Lowell were staring down a value-driven maturity default on an $86 million mortgage. In March, Wells Fargo threatened to foreclose on Berkeley Investments’ South Boston portfolio after a $41.5 million loan maturity. After long negotiations, Berkeley paid off the loan earlier this month.
