A looming mortgage maturity at Cross Point Towers in Lowell has two experienced investors, DivcoWest and Yale Properties, scrambling to dodge a looming default.
Divco and Yale are far from alone, though. The joint venture partners are the latest in a string of high-profile Boston landlords suffering hangovers from commercial real estate’s boom years. Together, these landlords’ experiences illustrate just how pervasive post-boom commercial debt and leverage difficulties have become – even for experienced operators in a region with statistically low levels of commercial distress.
The Gutierrez Co. is facing commercial foreclosure threats at two of its properties at the Middlesex Technology Center in Billerica. Nationwide Life Insurance Co. is trying to seize Buildings 4 and 5 at 900 Middlesex Turnpike in Billerica. The buildings, which total 141,000 square feet, are largely vacant, following the shut-down of their anchor tenant, a solar technology manufacturer. Gutierrez has said it would be cost prohibitive to reposition the manufacturing facility.
Wells Fargo is currently negotiating a deed in lieu of foreclosure with Normandy Real Estate Partners, after Normandy, owners of Boston’s John Hancock Tower, defaulted on a mortgage on Waltham’s Prospect Corporate Center. Normandy paid $13.4 million for the property in 2006, and financed the acquisition with $16.7 million in debt from Wells.
Eastern Real Estate recently lost control of the Bay Colony Corporate Center in Waltham, after its mezzanine position was seized by Prudential Insurance, another mezzanine lender at the faltering property. Eastern, whose founders made a killing flipping Wang Towers (now Cross Point) after the commercial downturn of the early 1990’s, gained control of Bay Colony last summer by foreclosing on the formerly high-flying New York firm Broadway Partners. Broadway, of course, also lost the Hancock to Normandy last year.
Berkeley Investments had much of its Fort Point office portfolio in Boston scheduled for auction this past spring, after the portfolio’s $41.5 million loan matured without replacement debt. Berkeley is believed to be close to finalizing a note purchase to recapitalize the buildings, although a June 16 auction of the properties remains on an auctioneer’s calendar.
New York development giant The Related Cos. lost Polaroid’s former headquarters to a foreclosure auction last October. Related had ticketed the 119-acre campus for a $500 million, mixed-use redevelopment, but quit most of its new development projects amid the commercial downturn. German bank Helaba, holders of a $70 million acquisition note on the site, took it back at auction for $42.5 million. Last week, Sam Park & Co. bought the property for $40 million.
In Boston’s northern suburbs, a partnership of the blue-chip REIT Mack-Cali Realty and Gale International handed lender UBS the keys on a souring $59 million, 667,000-square-foot office portfolio.
Securitized mortgage servicers also have their eyes on several local properties in varying degrees of distress. According to Fitch Ratings, in recent months, special servicers began workout talks on two Western Massachusetts malls belonging to the Pyramid Cos., as well as a pair of Boston office buildings owned by Normandy. According to CMBS.com, notable Boston properties on servicers’ watch lists include Transwestern’s tower at 75-101 Federal St., Brickman’s 55 Summer St. in Downtown Crossing, the Marriott Long Wharf, 1 Congress St., 10 Milk St., the Nine Zero Hotel, and Dorchester’s Harbor Point apartment complex.
