Friday, June 12, 2009

Condo at Lindbergh MARTA Station Faces Foreclosure

From the Atlanta Journal Constitution (Michelle E. Shaw, Ariel Hart)

One half of the residential component of MARTA’s transit-oriented development at the Lindbergh station may be in jeopardy of foreclosure.

A published legal notice says the condominium project Eon at Lindbergh — a key piece in MARTA’s strategy to win more riders through hassle-free commutes — will be sold to the highest bidder July 7 on the steps of the Fulton County Courthouse.

“We worked 10 years to get to this point and to make such inroads and transformed the entire neighborhood,” said Harold Dawson Jr., president of the Harold A. Dawson Co., the project’s developer. “And unfortunately these lenders can’t see the forest for the trees.”

The Dawson Co. is hopeful that before the auction something can be worked out with the lenders, Regions Bank and J.P. Morgan Chase Co., to save the completed five-story, 352-unit building, which sits on 3.5 acres. Regions said in the foreclosure notice that Dawson Co. has defaulted on a $56.3 million loan.

Though MARTA officials say the real estate implosion was beyond the transit agency’s control, the failure may represent a crack in its strategy for growth. All the same, on Thursday they expressed bittersweet relief.

“The good news is they don’t owe us any money,” said MARTA’s assistant general manager for planning, Cheryl King. “We did sell the land to them. … We’re hopeful they can resolve their issues quickly.”

MARTA officials had hoped developments such as the Lindbergh project would transform parts of metro Atlanta from car-dominated sprawl to a place where walking was pleasant and useful, and transit was necessary.

Such transit-oriented developments were a strategy the federal government pushed across the country, King said. And since they often contained condos, many of them have been hit hard by the recession.

Lindbergh City Center was a revolutionary concept in Atlanta in 1999. Then-Gov. Roy Barnes joined BellSouth Corp. in announcing the telecom company would anchor a planned 47-acre development to be built around the rail station. It was to include offices, retail spaces, a hotel, rental apartments and for-sale residences.

The Lindbergh master plan for the first phase included 363 rental units in Uptown Square Apartments and 352 sales units in Eon. An additional 500 to 700 units are planned for the second phase, which is on hold until the economy turns around, Dawson Co. officials say.

The project has run into a series of setbacks over the years, including the economic uncertainty that followed the Sept. 11 terror attacks. The proposed hotel was never built, and the condos are in limbo. After years of vacancies, a good portion of the retail area is now leased.

One other stark reminder of the slumping housing market hovers over the area: the skeleton of a condo building where a few floors were started before construction stopped. MCL Cos. of Chicago said Wednesday that project, called Skyline, remains on hold.

A bright spot has been the apartments, also developed by the Dawson Co., which have a 97 percent occupancy rate.

The economy, and a surplus of condos in the area, have wreaked havoc on sales at Eon, Skyline and other developments.

As a result, “a number of condominium projects have taken a rental strategy as opposed to sales,” said Brad Horner, president of Coldwell Banker NRT Development Advisors.

Dawson said his company also opted for the rental strategy with a plan to convert Eon’s condos into apartments, and it tried for months to get the loan restructured so the conversion would make fiscal sense.

“We really shifted and said this is a project that probably needs to be converted to apartments as an interim step,” Dawson said in a phone interview Thursday. “So you convert it to apartments, lease it out to cover your debt service so the project stays viable.”

Everyone was on board, Dawson said, except the banks.

“We came to the table to put more equity in, even though I think we have close to $10 million of equity in the deal between us and our investors,” he said. “But we were going to put in a significant amount of equity in return for some concessions from the bank, hoping we could make this thing work. We’re still hoping.”

Posted by Peachtree Mortgage Services, Inc. Visit our website at www.peachtreemortgageservices.net, or call us today at 770.481.0052.