Boynton Beach Warehouse Goes Back to Lender in “Friendly” Foreclosure

Written by smacke01 on March 12th, 2010

We are still early in the commercial foreclosure cycle, but one warehouse building has shaken loose and gone back to the lender.  Its located at 1420 Neptune Drive, Boynton Beach.

All warehouse investors and owners should keep this property on their radar because the Lender has taken the 30,000 sf multi-tenant warehouse building back in a friendly foreclosure.  It is now back on the market for $1.71 million, obviously the amount they loaned on it.  The building is a great building in a good location right off Congress Ave between Atlantic Avenue and Woolbright.

Boynton Beach Warehouse

The Million Dollar question is: How Much of a Loss is the Lender Willing to Take?

The warehouse sold for $2.25 million in 2005, which is $75/sf.  The buyer obtained a $1.71 million non-recourse loan from this Lender and had a 100% fully leased building with the hopes of someday selling the individual condo units.  The market turned and took all his tenants with it.  Instead of re-fitting the units for new tenants or breaking the units into smaller spaces, like I suggested in previous posts, the owner just let it sit.  He couldn’t get any tenants to stem the bleeding and obviously he just tossed the keys back to the Lender.

The building is in good shape, but the individual units are not suitable for this market.  They are too big, too many offices in some, too few offices in others.  Its going to take some serious work and cash to get the building up and cash flow positive again.  You know the Lender doesn’t want to deal with this, they have no idea about operating real estate.  To give you an idea of how the lenders think, they don’t hire local brokers because they use “national brokers” that probably need a GPS to get to the building.   This deal is peanuts to them and they want out.

Can an investor buy the building, re-fit the units, and rent it in todays market and still make a decent return?

I know this area intimately because its in my backyard.  My guess it will sell for around $1 million, which is a good number that should return a 9-10 CAP once the building is re-fit and full, BUT will somebody step up and do it??

I will be watching very closely to see what happens with this warehouse because its going to be a Bellweather for the rest of our industrial market.  If it sits for a long time, the banks are not willing to take the necessary haircuts.  If it sells quickly, investors are back in the game and banks are ready to deal.

Warehouse Radar

If you are an investor and want to look at this warehouse I would be more than happy to represent you and go over the numbers, local market, rent rates, built-out cost, etc.  This warehouse is a great building and you have a chance to steal it from the lender.  Call me for more details.

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This entry was posted on Friday, March 12th, 2010 at 10:55 pm and is filed under Commercial Real Estate, Industrial Market Conditions, Owners, Sale/Lease News, Warehouse Space. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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