City Manager Says Town Square Sale A Sign That Condos Will Sell Again
Saying this is “something we’ve been expecting for quite a long time,” Burien City Manager Mike Martin said Thursday (Oct. 28) called a pending trustee’s sale of Urban Partners’ Town Square complex “a good thing.”
ST Residential, which holds the construction loan for the six-story condominium/retail building, announced on Oct. 27 “the Burien Town Square property is scheduled to be sold pursuant to a trustee’s sale on Friday.”
The sale “moves the ball down the field,” Martin told The B-Town Blog. It signals “progress that in the not-to-distance future we will be seeing condos sold.”
But, he emphasized, this will not happen immediately. Nor does it “signal a change in the economic environment. We’re still in the doldrums. So the conditions that have been troublesome for this project still exist.”
Those problems, Martin added, are “not unique” to the Urban Partners’ development or to this area. “It’s all over the real estate market.”
Following the trustee’s sale, whoever takes ownership of the nearly vacant complex – the only privately owned building in Town Square – will first have to determine how to structure the prices for both condos and retail space, he noted.
Martin again underscored the fact that “no public money is involved in this private development. Burien taxpayers are not on the hook.”
Paul Keller, managing partner of Urban Partners, the private developer of Town Square, said Thursday morning that he will issue a statement in a news release this afternoon.
Urban Partners had been negotiating with ST Residential to retain ownership of the complex and for new repayment terms that reflect the current housing market.
Peter Marino, spokesman for ST Residential, said in Wednesday’s statement, “We are working with Urban Partners and, in the event an ST Residential affiliate is the successful bidder at the foreclosure sale, we expect to retain Urban Partners to manage the property to ensure a smooth ownership transition for the project and the existing unit-owners.”
Urban Partners financed construction of the six-story Town Square complex with a $38.5 million construction loan from Corus Bank of Chicago.
But the bank, a major construction lender, was closed and its assets seized by the Federal Deposit Insurance Corporation (FDIC) on Sept. 11, 2009 – just three months after the building opened.
The nation’s housing market collapsed about a year before Corus Bank failed and only eight months before the complex opened at the same time as the new Burien Library/City Hall building and Town Square Park.
ST Residential – an investment group formed by the FDIC, which retained a 60 percent interest in the Corus construction-loan portfolio, Starwood Capital Group and four other private investors – acquired Urban Partners’ Town Square project loan.
With negotiations between Urban Partners and ST Residential – initiated shortly after the failure of Corus Bank – moving slowly, a legal notice of foreclosure was filed on July 26.
If Urban Partners did not make a past-due payment of $3.5 million by Sept. 1, according to that notice, the Town Square complex would go into foreclosure.
Urban Partners still owes approximately $34.8 million on its loan from Corus Bank. Foreclosure will affect the 118 unoccupied condos that have not been sold, as well as ground-floor retail space and parking.
Six condos sold last year will not be impacted.
Urban Partners remains the private developer for the rest of the Town Square project, Martin said. “But the rest of the plan is up in the air. More condos would not work there, at least not in the short term.”
The possibility of locating a multiplex cinema in Town Square remains under discussion, but there has been no council agreement to date for Urban Partners to move in that direction.