The owner of a parking deck and office and retail building in Raleigh’s Glenwood South area has filed for Chapter 11 bankruptcy after being unable to renegotiate the terms of its loan.
Raleigh developer Neal Coker’s Burcam Capital II, which owns the 510 Glenwood Avenue building and the adjacent 450-space parking deck, listed both assets and liabilities of between $10 million and $50 million in its filing.
The largest listed creditor is LaSalle Bank, which is owed $782,245 and is the trustee for the bond holders who own the debt on the property.
Burcam Capital II took out a $13 million loan in 2003 that is scheduled to come due in September of next year. That loan was bundled with other commercial real estate loans and sold to Wall Street investors as a commercial mortgage-backed security.
These loans, because of their structure, can be among the most difficult loans to get modified.
The bond holders began foreclosure proceedings last year, and Coker said his group made several proposals to restructure the mortgage and extend its due date.
“Obviously, having to resort to a bankruptcy filing is a culmination of a series of attempts to negotiate,” he said.
Coker’s group sold all 36 of the building’s residential condos in the top three floors before it took out the 2003 loan. Burcam Capital II retains ownership of the building’s roughly 50,000 square feet of office and four ground floor retail spaces.
Nearly all of the office and retail space is now leased except for a 7,000-square-foot space that was once home to Cantina South. The building’s retail tenants include the restaurants Draft, Krave and Oryx.
Coker said his group remains extremely optimistic about the future of the property and of Glenwood South, noting that three new apartment buildings are being built nearby and a new Hampton Inn & Suites is scheduled to open next door by the end of the year. The hotel will provide an infusion of capital, as it is renting spaces in the parking deck for guests. “The bankruptcy filing, while it’s regrettable, was necessary, and we don’t think our tenants or our patrons will view any change day to day,” Coker said.
Such bankruptcy filings have become increasingly common in recent years as owners with income-producing properties have fought to hang on to their investments. The filings are both a protective maneuver to avoid foreclosure and a way to put pressure on a lender to negotiate.
A group of borrowers that own several properties in Raleigh’s Brier Creek development filed for Chapter 11 bankruptcy in an effort to rework loans held by Bank of America. Gregory & Parker, the owners of Seaboard Station in downtown Raleigh, and Lichtin Corp., the owner of Offices at Wade near the PNC Arena, also filed for Chapter 11 after failing to reach an agreement with their lenders.