00:15 26.07.2007 | All news from "Real Estate News"
HUD Seeks Bidders on Block 2 Mortgage
Uncle Sam, through the Department of Housing & Urban Development, is soliciting bids on a defaulted loan and intends to sell it in September.
The loan balance stood at $11.56 million when Capmark Financing Inc. of Horsham, Pa., turned it over to HUD, which guaranteed the mortgage.
Several unnamed parties have inquired about bidding on the loan, which likely will fetch a discounted price. How deep the discount will depend on the zeal of the bidder and/or how lively the competition.
You might recall that Little Rock financier Warren Stephens, who owns adjoining property and other downtown holdings, has previously expressed interest in the redevelopment.
Restrictions on the property will go away if the new noteholder forecloses on Block 2 Ltd., now led by Apollo Housing Capital of Cleveland. Apollo was the prime player in marketing $8 million worth of federal tax credits used to augment the project.
The heart of the Block 2 development is a trio of renovated buildings: the former Democrat Printing & Lithograph Building (home of Arkansas Business Publishing Group) at 122 E. Second St., the former Wallace Building at 101 Main St. and the former Archer Drug Building at 107 E. Markham St.
Loft apartments occupy the upper floors, with office and retail space on the ground floors of the three buildings.
The 85,000-SF Archer Drug Building is home to 69 apartment units. The 69,000-SF Wallace Building contains 44 units. The 82,000-SF DP&L Building has 32 units.
For now, the apartments are split 50/50 between government-subsidized units and market-rate units. The requirement that half the units be subsidized will wash out with the change in control.
Block 2 was launched by Paul Esterer and Todd Rice, who exited the development picture as the project slid into default.
Inability to lease non-apartment space is touted as a big factor in Block 2's lack of cash flow.
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