Auction set for The Dakota office building on West Stadium in Ann Arbor
The lender holding a $3.7 million loan on The Dakota office building in Ann Arbor is looking for a buyer for the note, putting it up for online auction on June 13.
The buyer who purchases the non-performing loan will be positioned to take ownership of the property at 1785 W. Stadium, developed by Michael Concannon in 2006.
Melanie Maxwell | AnnArbor.com
Representatives from Auction.com said they could not comment on the listing.
However, potential bidders do need to register before placing a bid and receiving confidential financial information on the property.
The auction follows an unusual court ruling in August, when a lawn service company won a judgment that ordered the sale of the building to pay a $26,000 debt.
That ruling was dismissed in December, according to county records.
Yet the last payment on the loan, now controlled by Bank of America, was made on January 11, 2009, according to the auction listing.
The office building is 88 percent occupied, according to the listing. Based on assessments, its estimated value is $1.9 million.
However, local real estate experts question what kind of bids the Dakota loan auction will attract, pointing out that the market for Ann Arbor area office buildings remains soft.
Prices for buildings in Ann Arbor are likely 40 percent lower than in 2004-2005, when the Dakota was proposed, said developer Ed Shaffran.
And the investment climate today leaves little money for lending for an office property, said appraiser Jay Alcock.
"Banks are not lending on that type of property," Alcock said. "... Don't be surprised to see an outrageously low price. There's no way to finance it."
The listing also represents a rare public sale of a distressed local property of this size and value. In December, 233 condos in Woodland Mews were sold after foreclosure, and a few other deals — like the deal for Sterling 4Eleven — involved private offers solicited by a lender.
Alcock said a likely buyer could be a hedge fund that will use cash to fund the deal. He also said he wouldn't be surprised if the property is converted to residential use, due to its location and the demand for rental housing.
Concannon developed several properties in Washtenaw County since 2004, with some projects started and others entitled but not built. Among his other projects are:
- Saline Marketplace + Lofts, which recently was listed for sale by 6 lien-holders who took possession of the property.
- The former Greek Church on North Main in downtown Ann Arbor and property on East Washington. Neither has been sold, according to city records.
- West Towne Condos on Liberty at Maple, which have been unoccupied since the first building was constructed in 2008.
Comments
simply amazed
Sun, Jun 5, 2011 : 2:34 p.m.
$15/sf would be about right. If he were getting $20, I'd be totally amazed. $20/sf and above is what they're getting for Class A buildings in the Briarwood area, but not on Stadium. I guess its all relative to whether these are NNN, gross or modified gross leases. I don't see the building listed on CPIX.net, so not entirely sure.
MB111
Fri, Jun 3, 2011 : 10:47 p.m.
Office rents are way down. 15 is about market. There is no sale. The buyer would purchase the loan so taxes will not change.
John B.
Fri, Jun 3, 2011 : 10:20 p.m.
P.S. What's the deal with West Towne Condos.?
John B.
Fri, Jun 3, 2011 : 10:14 p.m.
...and if it is purchased with cash, there is no debt to service. There might potentially be a quarter Million Dollars a years in gross income after Property taxes (if it rents for say, $20 per sf).
John B.
Fri, Jun 3, 2011 : 10:10 p.m.
...and the property taxes will be reduced significantly after the sale, yes? Or not?
John B.
Fri, Jun 3, 2011 : 10:07 p.m.
What makes you think this building rents for only $15 per square foot?
MB111
Fri, Jun 3, 2011 : 7:24 p.m.
According to the City, last year's taxes were 109,579 for a 20,040 sf building . This comes to $5.47 per foot in taxes. If office rents are $15 per foot, and the building is 100% occupied (Swisher has "West" area vacancy at 24% at the end of 2010) - then an owner only has $9.43 per foot to pay for all other expenses and debt service. I'd say that the bidding will be very light and this is not news - this is a reflection of the financial crisis. On a side note, this situation is symptomatic of what is occurring all over Ann Arbor. Eventually the asessments will decrease which will further lighten the City's coffers - I guess police/fire services will be cut further while the City wastes money on water sculptures and public art.
John B.
Fri, Jun 3, 2011 : 6:37 p.m.
"The listing also represents a rare public sale of a distressed local property of this size and value. In December, 233 condos in Woodland Mews were sold after foreclosure, and a few other deals — like the deal for Sterling 4Eleven — involved private offers solicited by a lender." Sounds like that makes it newsworthy - to me, anyways. What does the general consensus think the final auction price will be for this property?
MB111
Fri, Jun 3, 2011 : 2:52 p.m.
The headline for this article is very misleading. Loan sales are a common occurrence - I'm not sure this is even newsworthy.
Paula Gardner
Fri, Jun 3, 2011 : 4:27 p.m.
I haven't seen any go to public auction with a starting bid that low, though banks do shop their non-performing loans quietly (Ann Arbor Country Club is an example from a while back). It will be interesting to see where the final bidding ends - and telling for the local commercial real estate market in some ways.