Developer Loses High Rise Apartment Site to an Investment Bank, Lehman Brothers

December 17, 2010 / Russell Legato, Residential Property Analyst

Laconia Development of Walnut Creek, California, a development company lost Seattle’s First Hill, a property intended for a high rise apartment development to foreclosure. Laconia holds land-use permits on the city to construct two high rise apartment towers.

Developer Loses High Rise Apartment Site to an Investment Bank, Lehman Brothers

According to Laconia Development’s senior vice president Bob Kagan, Laconia still wants to continue with the construction of the Seneca Towers compound, the high rise apartment project at Seneca Street and Eighth Avenue, and is optimistic to buy the property from its new owner.

The company is said to reopen business talks with the property’s new owner, the Lehman Brothers on early January 2011.

Laconia’s high rise apartment will have two towers—one with 25 storey, and the other 9 with about 310 apartment units, which is above the building’s five-storey garage. The company originally wants to build condo on the property, but after 2008’s real estate decline, Laconia converted the project into a high rise apartment.

The development company borrowed money in 2007 from the Lehman Brothers to acquire and start the development on the high rise apartment, but Lehman has filed a notice last year that Laconia failed on the loan.

Lehman send another notice for foreclosure to Laconia in September 2009, saying that the development company has $13.5 million payable in principal, and an unpaid interest for about $4.3 million, still dating way back to June 2008.

Kagan also said Laconia had a former agreement with Lehman stave off the foreclosure but some issues came up that created problems, which prevented the settlement for the high rise apartment site.

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