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VOL. 124 | NO. 178 | Thursday, September 10, 2009

Raleigh Apartments Follow Foreclosure Trend

By Eric Smith

Print | Front Page | Email this story | Email reporter | Comments ()
“Some of the foreclosures were driven by the economy, but most were caused by aggressive leverage assumptions
from the last several years.”
– Blake Pera
Senior vice president, CB Richard Ellis Memphis multifamily division

The foreclosure crisis has claimed another multimillion-dollar commercial victim, this one the 432-unit Jamesbridge apartments in Raleigh.

A first-run foreclosure notice against the multifamily complex’s owner begins on Page 42 of today’s print edition of The Daily News and also at The Daily News Online, www.memphisdailynews.com.

Jamesbridge Group LLC, the owner of the sprawling property, defaulted on a $13.5 million loan through Lehman Brothers Bank FSB dated Sept. 21, 2006. Lehman Brothers went bankrupt last fall and the apartment’s deed is now owned by Bank of America NA.

Bank of America – under the entity LB-UBS Commercial Mortgage Trust 2006-C7, Commercial Mortgage Pass-Through Certificates, Series 2006-C7 – is foreclosing the property and will sell it Oct. 2 at noon on the steps of the southwest corner of the Shelby County Courthouse.

Per newspaper policy, calls to the parties involved, such as the property owner, deed holder or trustee, are prohibited until the notice is published.

Cash only

The Jamesbridge sits on 29.76 acres on the south side of James Road in Raleigh. Its addresses are listed as either 3689 James Road or 3815 Advantage Way Drive, between Jackson Avenue and Highland Road.

The complex contains 351,020 square feet and is dotted with lakes and pedestrian bridges. Its 2009 appraised value is $12.2 million, according to the Shelby County Assessor of Property.

Built in 1986, the complex has 24 three-story buildings, each with 18 one- and two-bedroom units. It also has a clubhouse/office building and swimming pool.

Jamesbridge Group bought the property in 2006 for $15.7 million from Jamesbridge Associates LP, financing it with the loan now in default.

The lender on Aug. 21 appointed R. Spencer Clift of the law firm Baker, Donelson, Bearman, Caldwell & Berkowitz PC as substitute trustee. Clift will conduct the substitute trustee’s sale.

ANOTHER ONE DOWN: This Raleigh apartment complex is in foreclosure and will be sold on the courthouse steps Oct. 2. It joins a variety of commercial properties that have followed the same pattern. -- PHOTO BY ERIC SMITH

Interested parties in the foreclosure include HD Supply Inc., Landscape Services Group LLC and Roto Rooter Service Co., according to the notice.

Also, according to the notice, the sale of the property “shall be made for cash in bar of all right and equity of redemption, homestead, dower, and all other rights or exemptions of every kind, all of which are expressly waived in said deed of trust, but subject to the following: any unpaid taxes against the property; and any recorded easements, conditions, covenants, rights-of-way or subdivision plats affecting the property; and any dedication of roads affecting the property and any governmental zoning and subdivision ordinances or regulations in effect; and any prior or superior liens, judgment, deeds of trust or other interests of record.”

One among many

This is the latest in a series of high-profile commercial properties affected by foreclosure, a trend that has been especially troubling for multifamily properties.

Last month, the 152-unit Gardenwood apartment complex at 4795 Hoover Drive in Raleigh sold in a successor trustees’ sale for $2.4 million following a foreclosure.

In June, the 460-unit Winbranch Apartments at 3595 Millbranch Road sold for $4 million in a successor trustee’s sale following a foreclosure to an entity related to Miami-based LNR Partners Inc.

Also in June, the developer of the unfinished $11.7 million Lamar Crossing Apartments was foreclosed. The 120-unit, 7.13-acre property on Lamar Avenue just north of Interstate 240 never was completed because its owner, Horizon Financial Group (operating in the transaction as Lamar Crossing Apartments LP), defaulted on an $8.1 million loan.

Foreclosure sales have dominated the industry’s activity in Shelby County of late, with the most lucrative deals occurring as trustees’ sales after the original owner defaulted and the lender reclaimed and resold the properties.

Of the 14 multifamily sales during the past 12 months valued at $1 million or more, seven have been conventional transactions, according to real estate information company Chandler Reports, www.chandlerreports.com, while the other seven have been bank, trustee, or health board sales.

Blake Pera, senior vice president for CB Richard Ellis Memphis’ multifamily division, told The Daily News recently that this situation is common around the country.

“The number of foreclosures we are experiencing in Memphis is pretty much in line with what most markets are experiencing today,” Pera said. “Some of the foreclosures were driven by the economy, but most were caused by aggressive leverage assumptions from the last several years.”

Chandler Reports is a division of The Daily News Publishing Co.

PROPERTY SALES 72 72 3,149
MORTGAGES 62 62 2,162
BUILDING PERMITS 476 476 7,527
BANKRUPTCIES 30 30 1,772