Breakwater Announces Completion of Tenant-in-Common Construction Plan

Share Article

Bankruptcy Court Approves Lender Settlement

“As with many of our TIC deals, the owners encountered unexpected hurdles that could have destroyed their asset. We think that they will be able to recover their entire investment, with dividends, over a period of time,”said Jemmett.

San Francisco Bankruptcy CourtJudge Thomas E. Carlson has approved a remediation funding agreement between the tenant-in-common (TIC) owners of Met Center 10 and the special servicer for the lender, LNR Partners. Met Center 10 is a 345,000 square-foot office building in Austin, Texas, that has been the subject of extensive litigation. Remediation construction is set to begin on August 6th.

“We are delighted to finally begin construction,” said Sam Brenner, an investor in Met Center 10 and the Chairman of the Steering Committee. “This has been a long and difficult process for everyone involved. We look forward to fixing the problems and providing a quality environment for our tenants.”

The construction costs will be approximately $3.7MM, and the repairswill permanently correct problems associated with the property, including ground movement issues. The renovation is expected to be completed in about 6 months. The funds came from litigation settlements with various defendants, including Lexington Insurance and Grubb & Ellis.

“This agreement marks a milestone on the owners’ road to recovery, and we are happy to celebrate it with them,” said Phil Jemmett of Breakwater Equity Partners. “Many of the Met Center 10 investors were counting on those monthly dividends to complement a fixed retirement income or to fund their retirement in full. The interruption of those payments has been painful for the investors. Fortunately, we expect to resume the payment of dividends later this year.”

The litigation settlements and workout were complicated by the tenant-in-common ownership structure and the fact that the original mortgage loan had been sold into a pool of commercial mortgage-backed securities. Fortunately the group of 22 investors unanimously decided to stick together throughout the negotiations, use the recovered funds to fix the building, and preserve the asset. “As with many of our TIC deals, the owners encountered unexpected hurdles that could have destroyed their asset. We think that they will be able to recover their entire investment, with dividends, over a period of time,”said Jemmett. “This was the outcome we were hoping for when we started working for the Met Center 10 investors.”

About Breakwater Equity Partners
Breakwater Equity Partners is a San Diego, CA based commercial real estate workout consultancy and investment firm. Through Breakwater’s extensive experience on over 200 engagements with loan values in excess of a $2.5B, the firm has devised a unique, multidisciplinary approach to uncovering and resolving distressed asset situations. Breakwater’s professional team combines legal, financial, economic, banking, and real estate expertise to devise customized strategies for each unique case regardless of market (gateways to tertiary), asset class (single and multi-family, office, flex, multi tenant land, time shares, development, power centers) or loan type (portfolio or CMBS). Please visit our website at http://www.breakwaterequity.com to review case studies on representative deals.
Breakwater Equity Partners, please call 858-490-3630 or visit http://www.breakwaterequity.com.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Danielle Gruden
Elle Communications
208.447.9232
Email >
Visit website