Case Study

Foreclosure of a TIC-controlled former anchor building at a regional mall whose tax lien was already sold

Oversaw the sale of a former anchor building for a major department store within a regional mall in Houston.
The Situation

Foreclosure of a TIC-controlled former anchor building at a regional mall whose tax lien was already sold

This property was owned by a group of TIC lenders who foreclosed on the property. This individual assignment was part of a larger disposition of a portfolio of REO assets.

The client advised us to ignore this particular property for several reasons:

  • Property had already had been ‘lost’ to a tax lien sale
  • Property was involved in a lawsuit for outstanding back CAM charges
  • Uncertainty about environmental risk due to the potential asbestos in the building
  • Property was subject to a number of reciprocal operating agreements that dictated use and operating restrictions of the six different properties that made up the mall

We encouraged our client to allow us to market this property for sale since Texas had a six-month redemption period.

The Approach

Removing uncertainty

We convinced an environmental consultant to conduct a Phase I report and an asbestos study on the building, with the expectation that they would be compensated at closing. The resulting report determined the building was clean, which removed a major uncertainty about the risk of acquiring the building.

With this knowledge, along with an understanding of the operating agreements, we walked buyers through the other important issues affecting the property and presented solutions to the perceived difficulties in acquiring and using the building.

This property was owned by a group of TIC lenders who foreclosed on the property. This individual assignment was part of a larger disposition of a portfolio of REO assets.

The client advised us to ignore this particular property for several reasons:

  • Property had already had been ‘lost’ to a tax lien sale
  • Property was involved in a lawsuit for outstanding back CAM charges
  • Uncertainty about environmental risk due to the potential asbestos in the building
  • Property was subject to a number of reciprocal operating agreements that dictated use and operating restrictions of the six different properties that made up the mall

We encouraged our client to allow us to market this property for sale since Texas had a six-month redemption period.

The Solution

All-cash sale

We secured a cash offer with a 30-day close. The client received approval from the TIC lenders to sell. During the inspection period, we helped settle the outstanding CAM lawsuit and coordinated with seller’s counsel, buyer’s counsel, and the title company with the redemption of the tax lien sale.

The sale closed and funded on schedule and the TIC lenders received a partial return of their investment from an asset that had already been written off.

Subsequent to the sale, the buyer of the property engaged us on a consulting basis to renegotiate portions of the mall’s operating agreements.

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