Boston’s Iconic Building Has Been Hit by Foreclosure Pangs
The iconic building of Boston, The John Hancock Tower, has been hit by foreclosure pangs. Next month it will be sold off to the highest bidder. Lenders foreclosed upon its owner Broadway Partners that had been lagging behind in mortgage payments and also on two other properties it had bought in 2006.
The team of lenders foreclosing on the tower kicked off the process on Friday 6th February. The New York firm of SL Green Realty Corp will be arranging the auction of the building on 31st March. Only a last minute agreement allowing for extension of the loan can stop it from being auctioned off.
Jonathon Yormak of Broadway Partners said these talks are ongoing. He commented, “We continue to own the (Hancock) and are having an open dialogue with our lenders at this difficult financial time.”
The foreclosing of the landmark tower symbolizes the depth of the crisis the country is passing through. The John Hancock Tower is now worth anything from $700 million to $900 million. It is a sharp fall from what it was worth two years ago. Broadway Partners in 2006 December bought the building for a whopping $1.3 billion after taking loans. The hope was that within a few years, considering the trend of the market, they would net in high profits. The rates of Boston per square foot increased to over $100. But the sudden collapse of the market has dashed all hopes. There is a deadline to meet to pay off this short-term loan.
The economy is grinding to a halt and the rent of offices is falling. It has become impossible to repay this mountain of a debt. The owners cannot generate sufficient funds to meet the sum unpaid and the banks are jittery – they are unwilling to refinance such a jumbo deal.
Bob Clifford of a real estate firm, Goedecke & Co said, “This is happening in every major city where deals were capitalized this way, with lots of short-term, highly leveraged debt.”
In the beginning of this year when Broadway defaulted on quite a few of its debts talks were held with many lenders who had their own interest tied up with the foreclosure of Hancock. Ultimately the decision was foreclosure and auction. The firm in charge of the same issued a statement assuring the tenants that during the period of this legal process they can continue with their operations undisturbed.
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