Wednesday, December 03, 2014

After loan default for B2 tower, Forest City gets four more months to recover

When a developer can't pay back a loan, the best option for the lender may simply be to give the developer more time, and that's what has happened--for the second time-- regarding the stalled B2 modular tower for Atlantic Yards/Pacific Park.

I reported in early October that the B2 owners--at that point Forest City Ratner and the Arizona State Retirement System--faced suspended disbursement of the tax-exempt financing because construction was on hold for 21 days.

"Mortgagor has obtained forbearance from the Lenders until October 8, 2014 in order to finalize negotiations on a longer forbearance period," wrote Atlantic Yards B2 Owner.

With a typical loan for a finished property, a forbearance gives the borrower time to renegotiate and repay unpaid debts. In this case, the forbearance is aimed at reestablishing progress on the building and thus reassuring the lender the money will be well spent and result in a building that will deliver revenues to repay the bonds.

Since then, Forest City bought out its co-owner on the building, and bought out Skanska, its partner on the shuttered modular factory that would deliver the needed additional modules.

Now, forbearance for four more months

According to a document that recently surfaced, a Forbearance Agreement dated 11/26/14 among the borrower, lender, and other parties indicates that the building--as has long been known--is officially late and thus past its Completion Date.

However, says the document, "Mortgagor has obtained forbearance from the Lenders until April 8, 2015, and is taking multiple steps to resume construction of the Improvements."

By then, perhaps, we'll know more about what's going on with the building, stalled at ten of 32 planned stories.


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