Polaroid’s former headquarters in Waltham is one step closer to the auction block, after the German bank holding a $70 million mortgage on the 119-acre development parcel tentatively scheduled an autumn auction date.
Landesbank Hessen-Thuringen Girozentrale (Helaba) has retained auctioneers Paul E. Saperstein Co. and set an October 9 auction date. The auctioneers recently advertised the sale, but termed the auction date as "tentative."
The Waltham site is currently owned by Watch City Development LLC, a joint venture between Polaroid and New York development giant Related Cos. Watch City has floated plans to turn the former Polaroid headquarters into a $500 million, 1.7 million-square-foot office and retail complex, but has since experienced what Polaroid lawyers have termed "severe financial difficulties."
Documents filed late Monday night in Polaroid’s bankruptcy case show that Related recently tried to hand the property back to Helaba. On July 29, a Related executive sent deed in lieu of foreclosure documents to Helaba’s New York offices. Helaba refused to accept the documents, though, since doing so would make the bank liable for Watch City’s $50 million mezzanine mortgage. That mortgage is held by the Virginia-based J.E. Robert Co. It expires in June, 2011.
By foreclosing on the Waltham property, rather than accepting the deed in lieu of foreclosure, Helaba will wipe out the mezzanine lender.
Watch City faced a late-June maturity on its $70 million first mortgage from Helaba. In federal bankruptcy court filings, the development partners said that Helaba was "unlikely" to extend the loan maturity date "unless a significant capital infusion is made into Watch City by its members."
However, the operating agreement between Related and Polaroid forbids each partner from fronting a sum greater than $4.25 million. The joint venture has outstanding mortgage debts of $120 million, but was capitalized with just two $750,000 contributions from Polaroid and Related.
Polaroid has tried to bolt from Watch City Development, but a bid to sell the company’s 50-percent stake in Watch City to Related for $1 has been derailed in bankruptcy court by a group of Polaroid creditors. Polaroid had said in bankruptcy filings that mounting debts and plummeting land values had left its stake in Watch City "essentially worthless." But a group of creditors, led by the alternative asset management firm Ritchie Capital, objected. In a court filing, Ritchie claimed Polaroid management had told Ritchie executives their land holdings, "the principle asset of which is Watch City, were worth approximately $165 million."
An audited financial statement for Watch City Development filed with the bankruptcy court showed Watch City ended 2008 underwater by $19.7 million.
Related Cos. had no comment. Neither Helaba nor Polaroid could be immediately reached for comment.
