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Bank buys Bella Sera condo complex at forclosure auction

August 19, 2011

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A multi-million dollar west Lawrence condominium development now is in the hands of an area bank that said it will begin searching for a new owner for the complex.

M&I Marshall & Ilsley Bank was the successful bidder at a sheriff’s sale Thursday for the financially-struggling Bella Sera at the Preserve condominium development along Bob Billings Parkway near Wakarusa Drive.

Developers had fallen behind on a mortgage for the property and owed M&I a little more than $13 million on the project.

The bank won the sheriff’s auction with a $2.075 million bid, which was the only bid made during the auction.

Cassie Writz, an attorney with the Kansas City-based law firm Bryan Cave, said her bank clients now would begin marketing the property to potential buyers.

Writz said the bank likely would look at selling the property to a single purchaser, but also may consider selling individual condos to interested buyers.

The property includes about 38 unfinished condominiums, a vacant parcel of land adjacent to the development, and several common areas such as a swimming pool, lobby, outdoor kitchen and bar area.

The auction attracted a large crowd, including many of Lawrence’s more prominent developers of commercial and real estate property.

About 13 units in the 50 unit complex are occupied. Writz said maintenance of the property’s common areas will continue under the bank’s ownership and that the development would operate in a “business as usual” mode during the transition.

Comments

Richard Heckler 3 years, 4 months ago

At $2.075 million those Condo's might become a great buy if the bank does not become too greedy.

optimist 3 years, 4 months ago

Profit always equals greed with you. Unless you go to work every day and work for nothing you too are greedy. We all invest our time and treasure with hopes of profiting from them. Why does it matter how much another profits. People that want an apartment at Bell Sera will pay what the market will bare. I simply don't see the problem with that and I can’t for the life of me understand why envious people such as you would even care.

compassionnotgreed 3 years, 4 months ago

The problem with profit in present society or capitolism is that such profit is always monitarily based, and there are only so many dollars in circulation. Even though more is printed, there are only so many. That means if someone gets more dollars, others have less and there is less money available to earn regardless of how much anyone works or how hard they work. If the profit were not monitary, but actually a profit of resources, the issue might be different. This is also compounded by the case that profit in capitolism is always made by inflating the actual value of something, say a pair of shoes or property, and getting a purchaser to pay more than the product is worth. The problem is obvious when considering land, the value of a certain piece of land cannot be infinitely inflated, and the real value is not the money one can make from it, but what someone can actually do with it, such as growing food. Remember, money is not wealth, it is only a representation of wealth. So when someone gets too much money, and inflates the proces of itesm in order to get even more money, that kind of profit is terribly harmfull to society, as we are experiencing today with the banking fiascio and bailout process...

otto 3 years, 4 months ago

The bank could have paid a dollar for it and it would be the same as paying 13 million. They are paying it to themselves.

Bob Forer 3 years, 4 months ago

The bank is out 13 Mil. Their bid amount is irrelevant. They are going to try to recoup as much as their money as possible. They may even sell it to a developer at a discount for a quick sale, who when then try to sqeeze as much profit out of the transaction as they can. Its called capitalism, and the units will bring what the market will bear.

nut_case 3 years, 4 months ago

Not necessarily. I'm sure the bid amount plays into how much they can write off as a 'loss' and have taxpayers pick up the bill.

Bob Forer 3 years, 4 months ago

Their loss has nothing to do with the bid amount. Its simple math. They are owed over 13 million. Subtract from that whatever they sell the property for and that is their loss.

Maracas 3 years, 4 months ago

While it was being built, I never did get why that whole Bella Sera thing was such a good idea.

Steve Jacob 3 years, 4 months ago

It was a different time, way back in the mid 2000's. Banks gave you all the money you want for property, because the value never went down. We created the mess we are in.

Dave McClain 3 years, 4 months ago

How is it that yesterday's article stated that the minimum bid would be 13.2 million (I do not remember the exact figure, but it was over the 13 million) and the bank that owns the loan can bid just over 2 million?

nut_case 3 years, 4 months ago

Clever ploy to scare off potential bidders, pick up the property for a song and write the loss off for taxpayers to pick up? (Then sell off the property in a real sale and make even more profit??)

Lee Eldridge 3 years, 4 months ago

Obviously the story yesterday was in error.

hoshi 3 years, 4 months ago

The bank is already carrying the $13+million loan so in essence they paid about $15+ million for the property.

jafs 3 years, 4 months ago

It seems a bit odd for the bank to buy the property from itself, doesn't it?

Why not just give it to itself instead?

jafs 3 years, 4 months ago

Can't the bank simply foreclose and take the property?

Laura Wilson 3 years, 4 months ago

That's what they did. Foreclosures are court actions that end with a sheriff's sale, at least in Kansas. In Kansas no one can just take property. Someone can surrender title to property but Bella Sera obviously chose not to do that or the bank decided not to go that route or it wasn't possible with the way the loans were set up.

Hudson Luce 3 years, 4 months ago

No, it doesn't quite work that way. The original mortgage/construction loan was for $16 million, of which about $3 million was paid off, leaving a balance due of $13 million. The bank has the title to the property and if the property had been sold at auction to another party for $2 million, the bank would get the $2 million, and could get a deficiency judgment against the developers for the remainder of the loan, $11 million plus interest. However, the bank bought the property, so it has $2million in the property plus the $13 million defaulted loan. The bank can sue the developers on the defaulted loan, and keep the property which now has marketable title. Assuming a dollar for dollar recovery on the defaulted loan, the bank's cost basis in the remaining 38 units would be about $50,000 per unit. If the recovery were less, then the part not recovered could be written off against profit as a business loss.

Don Whiteley 3 years, 4 months ago

You live in Kansas where you can buy a beautiful home for a song...and you want to buy a half-million-dollar apartment? I never got the concept and still don't. Good luck trying to unload these babies.

Abdu Omar 3 years, 4 months ago

Neither does anyone else and that is why it went into default and forclosure. They bank bought its own debt and they still are going to have trouble selling the rest of the condos. I have seen the shells of the condos and they are nice, but I wouldn't pay that much to live in a high rise with 50 other people. There are limits to living in a group. One bad apple spoils the whole plan.

Abdu Omar 3 years, 4 months ago

Neither does anyone else and that is why it went into default and forclosure. They bank bought its own debt and they still are going to have trouble selling the rest of the condos. I have seen the shells of the condos and they are nice, but I wouldn't pay that much to live in a high rise with 50 other people. There are limits to living in a group. One bad apple spoils the whole plan.

nut_case 3 years, 4 months ago

Because those beautiful million dollar condos are right in the middle of all the amenities! like....uh....well...OK - the McDonalds at 6th & Wak. Oh, and there is now a 1/2 size wal-mart super center across the street. And...that Smashburger and Taco bell in the high tax district on the north side of 6th.

Keith 3 years, 4 months ago

Combination night club and retirement complex. Name it Last Call.

nativeson 3 years, 4 months ago

This is a good resolution. The bank will likely write down the loan value to something reasonable, and the units will be sold at a rate that the market will sustain. I believe the concept of a condo development aimed at an affluent senior population will be successful at the right price point. This came in too high.

clovis_sangrail 3 years, 4 months ago

I think it would make a nice place for the homeless shelter.

Mr_B9 3 years, 4 months ago

Who were the developers that defaulted on the loan?

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