German lender Helaba took possession of the former Polaroid headquarters at auction in Waltham today for $42.5 million.
Ten bidders, each clutching a $500,000 deposit check, registered with auctioneers Paul E. Saperstein Co., but the action was light. Helaba took ownership with a $42.5 million bid.
Helaba sent Polaroid’s 119 acres of land to the auction block after the site’s would-be developers, a joint venture between Polaroid and New York development firm Related Cos., defaulted on a $70 million land acquisition mortgage originated by the German bank.
Helaba also auctioned off full ownership interests in three holding companies that control the site.
It was considered extremely unlikely that an entity other than Helaba or Related would take the site at auction. Land sales froze up last year, along with sales of other commercial assets. Land remains the most difficult commercial asset to value, and the hardest to finance, since it involves speculative long-term plays that lenders have had little appetite to entertain, according to sources.
"We expected the bank would do what they did," Waltham Mayor Jeannette A. McCarthy told Banker & Tradesman. "What I’m looking for is who’s going to honor the commitments that have been made?"
Prior site commitments from Related and Polaroid include $45 million in infrastructure improvements, including a direct on-ramp to Route 128 and an 11-acre easement for a future highway access road.
"Obviously, it’s a huge parcel and it has a huge impact on the city," McCarthy said.
Helaba moved to foreclose in August, rejecting a deed in lieu of foreclosure offer from Related. The auction will wipe out a $50 million mezzanine loan held by Virginia-based J.E. Robert Co. That mortgage would have expired in June, 2011.
The auction block is a far cry from where the Polaroid site’s would-be developers envisioned themselves landing. For three years, the instant camera firm and Related have been trying to revamp the 119-acre former headquarters into a $500 million mixed-use development, envisioning 1.7 million square feet of retail and office.
Related and Polaroid’s development partnership, Watch City Development LLC, faced a late-June maturity on its $70 million first mortgage. In bankruptcy court filings submitted before that debt maturity, Polaroid said its mortgage lender, Landesbank Hessen-Thuringen Girozentrale (Helaba), was "unlikely" to extend its maturity date "unless a significant capital infusion is made into Watch City by its members." Polaroid added that Watch City is "currently experiencing severe financial difficulties."
The joint venture had outstanding mortgage debts of $120 million, but was capitalized with just two $750,000 contributions from Polaroid and Related.
