Tuesday, June 24, 2008

Truxel Business Center Is Bankrupt

From the Sacramento Business Journal (via Lander's Blog):

Truxel Properties LLC, which owns the Truxel Business Center at 4090 Truxel Road in North Natomas and two residential development sites in the region, has filed for bankruptcy liquidation, listing $17 million in assets and $19.4 million in liabilities.

The center is about 40 percent leased, said Walter Dahl, the bankruptcy attorney who filed the Chapter 7 case, speaking on behalf of Truxel Properties and its managing partner, Volodymyr Dubinsky.

The company owes Bank of America $5.3 million on the property, according to the bankruptcy filings. Truxel Properties pegs the center's worth at about $6.5 million.
This is one of the properties I visited this February in my Natomas Area Commercial Real Estate Photolog. Here are some more pictures of this "40 percent leased" office park:

There is a huge glut of this kind of office space in Sacramento, so I'm not sure where they're getting their $6.5 million valuation. It's going to be doubly hard to get cash flow out of this property until a new, financially stable owner appears. Until then, the street racers will have a field day.


... said...

It was easier to race before all the buildings came...

When the liquidity was removed from the market, all valuations nose dive. This is the problem when you invest/develop purely on "factors" without leaving room for risk.

My guess is BofA will wholesale it off to some RE investment group that's wary of the stock market at say 40-50% of the "value"

Thats a wholesale price for bulk, distressed, new, property folks.

Josh said...

Thats a wholesale price for bulk, distressed, new, property folks.

Yup. I just don't understand why the lawyer is still overstating valuation and occupancy. I guess he's still using his sales script. :)

... said...

I've known the lawyer for a few decades, he's extremely honest and a great citizen. I'm thinking his job is not to value the property, but a CPA's or appraiser's. And there would be several values...

Wholesale/bulk - for those with enough cash to buy it empty, hold it and lease it out over time.

Distressed/REO - maybe less than above because a lender wants it off the books and cannot perform the leasing tasks.

Retail/occupied - the value using a factor, the value you would use for the ultimate commercial mortgage.

patient renter said...

You forgot this value:

Government subsidized public housing - with the forclosure "crisis" causing so many people to "lose their homes" maybe the gubamint would be interested in converting large commercial spaces into bulk housing. And of course, in the great time-honored tradition of government spending, the current owners could probably still see a huge profit if uncle Sam got involved :)