As Los Angeles County commercial real estate loan modification attorneys, we were interested to see a report that a troubled investor has sold one of its buildings. Maguire Properties Inc., one of downtown LA's biggest landlords, sold the Griffin Towers in Costa Mesa for $90 million, the Los Angeles Times reported March 17. Experts in the article said the transaction -- which is the biggest one in Southern California thus far in 2010 -- may be a sign of improvement in the CRE market. That would be good news for Maguire, which is struggling financially after a former leader overextended the company financially during the height of the market.
The article did not specify whether the property was sold at a profit or a loss. However, a previous report from the Wall Street Journal said Maguire acquired it as part of a nearly $3 billion package of buildings in 2007, when prices were much higher. The building came with a $200 million mortgage, which Maguire refinanced by paying $20 million and taking on $180 million in new debt. A month later, Maguire's founder left the company. The sale is part of the new leadership's attempts to reduce its debt and stay financially solvent, the Wall Street Journal said. An expert quoted in the Los Angeles Times echoed that analysis, saying the sale eliminated the potential headache of refinancing the lease, which will come due in May. However, he said, Maguire still owes more than $20 million on the building.
This deal interests our Irvine commercial loan modification lawyers because it looks a lot like a residential short sale. In a short sale, the homeowners take a loss on the home in order to get out of their obligation to pay back the loan, which may be more onerous in the long run. This seems similar to the strategy Maguire was using in this transaction. The company may not have been able to refinance when the debt on Griffin Towers matured later this spring, which could have forced it to take on even more debt or even foreclose. By selling the property at a loss instead (if that is what happened), Maguire may have avoided even greater losses down the road, as well as a foreclosure that could harm its credit. In cases where the company is too financially strapped for a loan workout, this may be the best alternative available.
At Howard Law PC, we find that our CRE clients prefer to try a loan modification whenever that is possible. If the circumstances are right, commercial loan modifications allow borrowers to hold on to properties and lenders to avoid the losses they might take in a foreclosure. However, many lenders are just as reluctant to negotiate loan modifications for commercial borrowers as they are for residential borrowers, because they're afraid of real or imagined loss of profits. We believe involving our Riverside commercial real estate loan modification lawyers makes a huge difference for borrowers, because it notifies lenders that a lawsuit may be in the works. With or without litigation, we make it clear that our clients won't put up with delaying tactics or transparent excuses.
If you're seeking a modification of a commercial real estate loan and you need the persuasive power of an attorney, Howard Law can help. To set up a free consultation, call us toll-free at 1-800-872-5925 or send us an email today.