Thursday, February 23, 2012

Wow For Looks - Wow For Price!

From Today's Seattle Daily Journal of Commerce"Everybody loves a bargain. We think we've found one in downtown Salem, Ore."

The Meridian is a bank-owned, mixed-use complex that cost more than $40 million to build and is now being offered for sale for $8.8 million. It is mostly completed but another $4 million will be needed to finish it, says broker Rob Marton of HFO Investment Real Estate in Portland. HFO has the listing with Grubb & Ellis' Portland office.

“It's a phenomenal looking building. You drive by it and you literally go, ‘Wow! What's that doing here?'” said Marton. He said The Meridian would stand out even in Portland's Pearl District.

We checked the photos, and that's not just broker hype. You can see too at http://tiny.cc/hg3ey.

Dan Berrey of Commercial Concepts Inc. developed the six-story complex, which has housing and commercial above underground parking. The award-winning project was designed by Arbuckle Costic Architects and built by John Hyland Construction. It was substantially finished in 2009.

The Meridian has about 15,300 square feet of commercial space and 89 housing units. Roughly two-thirds of the commercial space sold for $180 a foot, and four of the 89 condos sold for between $214 and $383 a foot, Marton said. Thirty-seven other condo units are finished and rented for about $1.25 per square foot. 

Grubb and HFO started marketing The Meridian earlier this month. The call-for-offers date has not been set, but Marton said the team is aiming for March 9.

Berrey said the project was hurt when Fannie Mae and Freddie Mac stopped lending money to residential condo buyers. Work stopped when the Federal Deposit Insurance Corp. shut down the construction lender, First Regional Bank of Los Angeles. “It was a double-edged sword,” Berrey said.

The original lender was taken over by First Citizens Bank of North Carolina. The Oregonian reported in 2010 that First Citizens sued to recover $35 million outstanding on the loan. Berrey declined to talk about how much was owed or name his equity partners.

The loans and other real estate that First Citizens acquired were covered by a loss-share agreement with the FDIC. That provided protection against losses to First Citizens Bank and, according to Berrey, made the bank less willing to strike a deal with him.

“We had tried several times to negotiate with [First Citizens],” Berrey said, though he offered the bank $20 million more than a year ago. The bank held on, and the value of The Meridian kept dropping. “It's a great example of taxpayer waste, in my opinion.” 

--Marc Stiles