Big Chagrin Blvd. office building in foreclosure
Orangewood Place, one of the larger multitenant office buildings along office-rich Chagrin Boulevard, has landed in a foreclosure proceeding in Cuyahoga County Common Pleas Court.
Court documents say the owner of the five-story building managed by Rosemont Realty Corp. of Santa Fe, N.M., have failed to make monthly payments of an undisclosed amount on a $9 million loan despite receiving a demand for payment as far back as Dec. 14. U.S. Bank serves as trustee for bond holders in the foreclosure case, which was filed May 4.
The case was assigned to Judge Carolyn B. Friedland, who had not acted by last Friday, May 11, on a request to appoint a receiver to operate and sell the property to recoup some of the debt owed.
The plaintiffs estimate that with late and default fees and prepayment penalties, the building owner, BIG Orangewood Place, owes a total of $12.3 million.
BIG Orangewood's ownership is not a typical one. BGK Equity, a nationally known property investor and predecessor of Rosemont Realty as property manager, had been Orangewood Place's sole owner since the late 1980s. However, in the 2000s it converted the property to a tenant-in-common form of ownership, where several BGK principals and nearly a dozen other investors share stakes in the property.
Three calls to Rosemont Realty and two calls and an email to CWCapital Asset Management LLC of Bethesda, Md., which serves as a so-called special servicer of the loan, were not returned by Crain's deadline last Friday. A spokeswoman for U.S. Bank referred calls to CWCapital as the representative of bondholders with interests in the loan.
Although Orangewood Place at 3690 Orange Place occupies a highly visible position off Interstate 271, it sits on the east side of the busy freeway while most of the office buildings in the Chagrin Boulevard market are on the highway's west side.
Steve Egar, owner of the Egar Associates real estate brokerage in Beachwood, said he was surprised to hear about the foreclosure filing because of the building's high occupancy rate, 85%, which most owners see as well above the break-even point.
However, Mr. Egar said Orangewood is an older building, dating from 1974, in a hyper-competitive market. Moreover, he said, out-of-town developers and owners have not fared well in the Cleveland suburbs, where they often must compete with well-heeled older property owners with substantial equity.
Greg West, an Ostendorf-Morris Co. vice president who handles leasing at Orangewood pooh-poohed the significance of the filing.
“It's business as usual there as far as we are concerned,” Mr. West said.