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Thursday, April 17, 2014

Mortgage holder lands Wilson Estates buildings

By Dan Voorhis
The Wichita Eagle

Three foreclosed office buildings at Wilson Estates went to their mortgage-holder at a sheriff’s sale on Wednesday.

Representatives of BACM2006-5 Wichita Offices LLC took over ownership of what are known as the Bank of Kansas building, the Capitol Federal building and the Morgan Stanley building.

The company had originally sought more than $14 million in principal, fees, interest and penalties. The name “BACM2006-5” comes from the commercial mortgage-backed securities that secured the property.

During Wednesday’s sale, the company’s lawyers won the bidding for the buildings with a bid of $8.6 million.

But the company ran into spirited bidding competition from Paul Jackson, the park’s original developer and operator.

Jackson said he knows the buildings well and understands their value, but he also said times are difficult and he only wanted to pay for what he thought they were now worth.

“How much are they worth? That’s the golden question,” he said.

Jackson built the buildings at the end of the 1990s and for much of the last decade they were the city’s premier office buildings.

Jackson sold them in 2006 to DBSI East 21st Street LLC, which split ownership of the buildings and sold them to 37 small investors across the country.

These small investors borrowed $11.3 million from Bridger Commercial Funding in 2006 to acquire the buildings. The note changed hands from bank to bank before BACM2006-5 Wichita Offices LLC acquired it late last year.

It’s unclear who BACM2006-5 Wichita Offices LLC is. The company is incorporated in Delaware. The attorney representing the company referred questions to the company, which didn’t immediately respond to calls for comment.

Wilson Estates, like almost all commercial property in Wichita, has struggled in the downturn. Court documents tell of tenants falling behind on rent, deals cut to keep tenants and rising vacancy rates. The three buildings had an average of about 75 percent occupancy at the time the foreclosure was filed Dec. 30. It has been under local management, Weigand-Omega, since then and some new leases have been signed.

According to a property value estimate in court documents, the buildings are worth $7.3 million to $7.6 million, based on the income being generated by the tenants. However, the valuation said that under more normal conditions with tenancy over 90 percent, the value would be $10.3 million to $10.9 million.

Reach Dan Voorhis at 268-6577 or dvoorhis@wichitaeagle.com.

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