Met Center 10 investors secure new financing; foreclosure averted

Jun 19, 2014
Austin Business Journal

Owners of industrial office space at Met Center 10 in Southeast Austin near the airport may be sighing with relief now that permanent refinancing of the 345,000-square-foot property has closed

The building at 7551 Metro Center Drive had been the focus of lawsuits, a bankruptcy filing and a near-default of the loan obtain by a tenants-in-common group that purchased it in 2005

At issue, as outlined in previous Austin Business Journal stories, was whether the brokers and lenders involved conspired to defraud the investors after structural defects emerged due to soil problems

Lucent Capital in Los Angeles provided the investors with the new $29,250,000 non-recourse loan to refinance existing debt and complete remediation of the property’s foundation. It also provides financing to reconfigure the parking and create 100 additional spots. Despite the problems associated with the building, it’s largely been occupied and is currently fully leased by the State of Texas Department of Insurance and drug tester Pharmaceutical Product Development, or PPD

The new loan has a fixed rate of 4.85 percent, amortized over 10 years

The deal presented many challenges, including creating a single legal entity from among the tenants-in-common for purposes of obtaining the loan

A spokesman for Lucent Capital said the deal was brokered in large part because of the lender’s relationship with Breakwater Equity Partners, which represented the investors’ interests through the many legal proceedings. Locally, Mike Hull, a partner in Hull Hendricks LLP, handled the court actions and negotiations

He has been involved with other cases associated with other buildings at Met Center, which have faced similar structural problems

Now that the Met Center 10 investors have resolved their financing issues there are five properties in the Austin market which are secured by loans in some stage of delinquency or default, according to Trepp LLC, an international research and data firm

Those properties are Hester’s Crossing Shopping Center, 2400 S. I-35 in Round Rock, which was taken back by the lender; Met Center 1, 7901 E. Riverside Drive, which was taken back by the lender; Shops at Lakeline Village, 1420 Cypress Creek Road in Cedar Park, which is delinquent by 90 days or more; Hawthorne Suites, 7800 E. Riverside Drive, which is in foreclosure; and Cross Park Industrial Building, 8705 Cross Park Drive, which is in foreclosure

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