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July 29, 2010 |
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| December 31, 2009 |
By: Eric Kalis |
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lender has taken title to a two-building Boca Raton office property that has struggled since the departure of tenant Washington Mutual.
An affiliate of Atlanta investor Songy Partners transferred ownership of the buildings at 1501 Yamato Road to RAIT Partnership of Philadelphia, according to Palm Beach County records. Songy obtained a $46.5 million loan from RAIT when Songy purchased the 10-acre complex for $43.4 million in December 2006.
Calls to Songy chief executive officer David Songy were not returned.
Joseph Hernandez, a former Hogan & Hartson attorney in Miami, handled the transfer for Songy Partners. Calls to Hernandez at his new firm, Angelo & Banta in Fort Lauderdale, were not immediately returned.
In the deed in lieu of foreclosure, the transaction consideration was recorded as $41.8 million, but no money likely changed hands since Songy owed RAIT the balance of the 2006 loan. The consideration amount in a deed in lieu of foreclosure transaction generally is what is considered the fair market value of the property.
Calls to RAIT executive vice president Kenneth Frappier were not returned. Frappier had signed incorporation documents filed with the Florida Department of State on behalf of RAIT.
The property suffered a setback in late 2008 when anchor tenant Washington Mutual moved out of two buildings it had occupied. The move came after JPMorgan Chase’s September 2008 takeover of the bank. About 90 employees who worked at the location lost their jobs, according to CoStar Group.
Songy’s 2006 purchase of the complex was a sale-leaseback transaction with the bank, which had owned the complex for four years. The company had outbid many other investors at the time, according to Songy’s Web site.
At the time of Songy’s purchase, executives touted the strong potential of the Class A buildings, which were only 61 percent occupied. The buildings, which total 171,000 square feet, were completed in 1997 and include a parking garage.
Songy Partners has been a longtime investor in South Florida. In 2000, it built Wachovia Plaza in Boca Raton, a mixed-use complex with a 110,000-square-foot office building and 235 rental apartments. Songy sold the complex for $26.6 million in December 2002, according to Palm Beach County records.
RAIT Partnership is part of RAIT Financial Trust, a real estate investment trust. RAIT invests in and manages commercial real estate. It also acquires and provides loans for properties, according to the company’s Web site.
Leasing space at the Yamato Road property could be challenging. Boca Raton’s office market has been hit by steadily rising vacancies. Since the first quarter of 2007, vacancies in Boca Raton have soared from 11 percent to 21.7 percent, according to CoStar Group.
The rise in vacancies has pushed asking rents down from $28.68 per square foot in the first quarter of 2007 to $27.95 per square foot in the third quarter of 2009.
Eric Kalis can be reached at (305) 347-6651.
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