COMMERCIAL
Irvine-based Bacchus Development and its primary lender can’t agree on the value of Irvine Spectrum office condominiums that the bankrupt company is trying to sell.
Bacchus, which filed for bankruptcy protection last September, is trying to get court approval for a new plan of reorganization that would give the company another three years to complete sales for about 50 condos it built in three Spectrum projects.
The company’s one of the larger local developers to recently file for bankruptcy.
Bacchus officials are basing much of their amended reorganization plan, which was filed last month, on the belief that the local commercial real estate market will stabilize this year as the economy improves.
San Francisco-based Union Bank NA, which was owed more than $70 million by Bacchus at the time of the filing, remains skeptical of the developer’s plans.
The bank’s lawyers said in recent court filings that the updated plan is little more than a ploy “designed to allow (Bacchus’) sole owner, Steven Bren, to roll the dice with secured creditors’ money.”
Bren is the son of Irvine Company Chairman Donald Bren, who is not associated with Bacchus.
Bacchus officials are betting on a market turnaround. They’re projecting its unsold properties will increase in value by about 13% in 2011 to 2012 and that values should stop declining by the second half of this year.
The company has recently closed sales from $190 per square foot to as much as $355 per square foot, according to court filings. Bacchus sales officials place a combined value of about $93 million on its unsold buildings, which is above the roughly $73 million of debt the buildings have on them.
Union Bank places a lower value on the roughly 50 unsold properties, which have about $220 of debt per square foot tied to them.
The buildings were appraised by Union Bank at less than $180 per square foot. The bank also notes that some recent higher-priced sales were for buildings with plenty of internal improvements, while the bulk of the unsold buildings currently are empty shells.
Bacchus markets its buildings to owner-users, which is one of the more active sources of deals these days, brokerage data shows.
User sales represented nearly 40% of office transactions in 2009 for Orange County and Los Angeles, according to CB Richard Ellis Group Inc. figures.
The owner-user sector was responsible for about 15% of the area’s total sales in 2008 and 25% of the sale market in 2008.
But the sales projection isn’t the only thing Union Bank has issues with.
Union Bank also is critical of Steven Bren, who would receive $23,000 a month in compensation.
Since the Bacchus “assets are run by outside managers, and sales are done by commissioned brokers, the justification for Bren’s significant compensation is unclear,” the bank noted in a recent court filing.
RESIDENTIAL
New York’s Angelo, Gordon & Co., a deep-pocketed private equity firm, is spending money in OC’s office and apartment markets.
Angelo Gordon, which has bought more than $11 billion of real estate since 1993, recently closed on the acquisition of the Briarhill Apartments, a 128-unit Fullerton apartment complex.
It partnered with Fifth Street Realty Partners Inc. on the $16.1 million deal for the complex, which translates to about $126,000 per apartment.
The two buyers got a $9.1 million loan for the acquisition, which was arranged by Meridian Capital Group LLC. The financing was based on a five-year nonrecourse term with a fixed 4.79% interest rate.
The complex previously traded hands in 2001, for $12.9 million, according to Business Journal records. That buyer was Phoenix’s NNC Apartment Ventures.
Angelo Gordon has a larger deal in the works in Santa Ana. It bought the Griffin Towers office complex from Los Angeles-based Maguire Properties Inc., in a partnership with Dallas-based Lincoln Property Co.
The deal for the two 14-story buildings closed last week. The buildings are expected to trade hands for just less than $90 million, or about $167 per square foot.
High-Rise Sales
Officials for Scottsdale-based condo tower developer Geoffrey H. Edmunds & Associates said they’re seeing signs of increased demand for the company’s latest project in Irvine, 3000 the Plaza.
The 15-story building saw seven homes sell in February—one of the developer’s most active sales months. Sales ranged from $600,000 to $1.5 million and included three models, officials said.
There’s fewer than 30 new homes remaining for sale at the 105-unit tower, one of three condos Edmunds built at the corner of Jamboree Road and Campus Drive in a partnership with Phoenix-based Opus West Corp.
Edmunds acquired full ownership of the unsold homes at 3000 the Plaza last year, after Opus West filed for bankruptcy.
