SAN DIEGO, Calif. – In a landmark case that opens the door for substantial boosts in commercial real estate loan recovery for lenders, the Arizona Superior Court has issued a ruling enabling San Diego-based receivership and loan recovery specialist Trigild to sell seven Arizona apartment complexes to Standard Portfolio for $123 million.
According to Trigild president Bill Hoffman, who appeared on Trigild’s behalf as receiver, the properties are now in escrow, and were put into receivership March 9, 2009 after being abandoned last year by The Bethany Group, a financially strapped Irvine-based real estate and investment firm. “Trigild, and lender’s counsel from the Capital Markets Group of Thompson & Knight, won authority from the court for the receiver to sell the properties during receivership and not require the lender to foreclose prior to a sale,” Hoffman explained. “This was unprecedented — and a major victory for special servicers — as a sale by the receiver brings the properties to market much sooner than a foreclosed property, and allows the special servicer to provide assumable financing for the new owner.”
According to Hoffman, “the availability of financing for this sale allows us to deliver a much better recovery for the lender, in this case more than $53 million above the best ‘all cash’ price.”
Hoffman explained that some states, and the federal courts, already provide for such receiver sales, but often only if the borrower does not object. Other states have specific rules forbidding such sales by receivers. Arizona had no specific rules allowing or forbidding, and Hoffman argued, over strenuous objection by borrower’s counsel, that the court could exercise its equitable powers to do what was most beneficial for all parties. “In this case we argued that this judge had wide discretion, and since any guarantors on the loan may have potential liability for deficiencies, the sale at a much greater price benefited them as well,” said Hoffman.
The Arizona properties — part of the Bethany portfolio of multi-family projects throughout the country — garnered notoriety when the owners abandoned them in the Spring of 2009, resulting in deferred maintenance, unpaid employees and suppliers, as well as many concerned residents. The 2,759-unit portfolio includes the 460-unit Laguna Village; the 320-unit Alante at the Islands and the 374-unit Santana Crossing in Chandler; the 432-unit Whispering Meadows and the 582-unit Tuscany Palm in Mesa; the 395-unit Sienna Springs in Phoenix and the 196-unit Verrado Park in Glendale.
Upon the abandonment, lender’s counsel immediately moved to have Trigild appointed receiver of 13 Bethany properties, including the seven Arizona assets.
As receiver, Trigild quickly addressed needed maintenance and repairs, restored order and ensured efficient operations – positioning the properties for a quick and profitable sale by improving the occupancy and revenues along with resident and community support. “The resulting increase in the immediate value was recognized by the court,” Hoffman said.
Headquartered in San Diego, with regional offices throughout the country, Trigild has more than 30 years of expertise in managing a wide array of commercial real estate assets and operating businesses, focusing on turnaround management and repositioning of troubled properties. Trigild is located at 12707 High Bluff Drive, Suite 300, San Diego, 92130. For further information, visit www.trigild.com.