The following is a list of commercial real estate and homebuilder defaults involving Orange County firms that we have been tracking since September 2008. Please let us know if there are any significant cases that we may have missed.
Recent commercial real estate and developer defaults include:
Bacchus Development, Irvine: Filed Chapter 11 bankruptcy in September after slow sales in its newly built office parks curbed the firm’s ability to repay loans. The firm is owned by Steven Bren, son of billionaire Irvine Co. Chairman, Donald Bren.
Bethany Group LLC, Irvine: Filed 18 bankruptcy cases in March on behalf of 16 apartment complexes it owns in Texas and Maryland. The company alleged that lenders gained control of the complexes’ rent revenue because of falling property values. That made it impossible for Bethany to cover the complexes’ expenses, the company maintained.
California Coastal Communities, Irvine: Filed Chapter 11 bankruptcy on Oct. 27, seeking to gain more time to repay $182 million in debt due by June 2010. The developer of the 356-home Brightwater development overlooking the Bolsa Chica (pictured left) previously defaulted two times on loan payments. It defaulted on $759,000 due in mid-October, less than two weeks after it defaulted on a $1.7 million payment due to lenders on Sept. 30.
Irvine Co., San Diego: Fitch Ratings reported in September that loans are in trouble on two buildings the company owns in San Diego because occupancy rates dropped to 63 percent.
John Laing Homes, Irvine: Filed for bankruptcy in February with $977 million in debt. Dubai-based Emaar Properties bought the firm for $1.05 billion at the market peak and invested $600 million. The company since laid off 90 percent of its work force, stopped paying rent on its offices and transferred operation of its Western U.S. projects to receivers.
Maguire Properties, Los Angeles: Took a $73 million loss in June when it sold 3161 Michelson Dr. in Irvine. The tower was to be anchored by New Century Financial Corp., a now-defunct subprime mortgage lender. In June, Maguire took a $40 million loss when it sold a three-building complex in Orange that had been the headquarters for the now-defunct Ameriquest subprime lending empire. In August, Maguire announced it would give one Los Angeles property and six in Orange County back to its lenders.
Mammoth Equities LLC, San Juan Capistrano: Three office buildings built by Mammoth Equities filed for Chapter 11 bankruptcy in September when they were unable to pay off construction loans that had or were about to come due. Another bankruptcy case affecting two buildings in San Juan Capistrano was filed in July. Loans total nearly $68 million.
Opus West, Arizona: The pioneer in Orange County’s condo-tower experiment announced in July it would file for Chapter 11 bankruptcy. The commercial and multi-family developer blamed “steep and pervasive declines” in commercial real estate values and a tight credit market for hampering the company’s fortunes. The company built three condo towers in Irvine. The newest tower, the 15-story 3000 The Plaza, was rescued from foreclosure and bankruptcy by a minority owner.
Pacific Property Assets, Irvine: Skipped its May 1 loan payment to 752 investors. The firm owns 49 apartment complexes in Long Beach, the Inland Empire and Arizona. It uses investor funds to buy and fix up aging apartment buildings, then refinances with traditional lenders to pay off the notes. Problems arose when the company couldn’t refinance purchase loans into lower-cost debt. Bankruptcy was not being considered, its CEO said at the time. In July, the company filed for Chapter 11 bankruptcy.
St. Regis Monarch Beach, Dana Point: Owners of the five-star resort (pictured above) agreed in July to give the property to lender Citibank before a scheduled auction. The property had been refinanced with $300 million in loans in 2007.
South Coast Home Furnishing Centre, Costa Mesa: A $100 million, 300,000-square-foot “one-stop” furniture mall abutting the I-405 was sold by a receiver for $35 million in February. The lender lost at least $49 million on the deal.
SunCal Cos., Irvine: While the parent company is not in bankruptcy, 22 independently run SunCal developments across the state ended up in bankruptcy court between September and November 2008. The bankrupt entities include the 308-home Marblehead Coastal project in San Clemente, the Pacifica San Juan housing project in San Juan Capistrano and the 300-home RiverBend project in Orange.
Sunstone Hotel Investors, San Clemente: Reported in June it would give its W Hotel in San Diego back to its lender. Sunstone bought the 258-room hotel in 2006 for $96 million. In September, it accounted it would do the same thing with the Marriott Ontario Airport.
TO REPORT OTHER COMMERCIAL OR HOMEBUILDER DEFAULTS: Send an email to jcollins@ocregister.com and put, “COMMERCIAL DEFAULTS” in the subject line.
