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TAMPA —The Second District Court of Appeal (DCA) has handed a win to the former owners of Tampa's Beaumont Business Center. The court unanimously overturned the October 2012 foreclosure judgment against the business center that had been awarded to mortgage securities holders through the special servicer ORIX.
The case was especially significant given that ORIX resold the property in June to LSREF2 Oreo (Direct) LLC for $14.5 million.
The 11-building, 252,818-square-foot property was previously owned by 25 tenant-in-common investors, who bought it for $21.3 million in 2004.
Breakwater Equity Partners, a commercial loan advisory and restructuring consultant hired by the original owners, says that ORIX began the foreclosure case against the property owners despite knowing there were two versions of the loan documents. ORIX chose to enforce a foreclosure using the earlier 2011 maturity date instead of another promissory note listing a maturity date in 2012.
“Special servicer incompetence is unacceptable,” Jack Rose, chief strategist for Breakwater, says in a press release. “ORIX should have checked the maturity dates on the promissory notes before starting foreclosure. When ORIX found out that it had made a mistake, ORIX should have come clean and worked with the borrower to repair the damage it created. All too often special servicers act in a hostile, high-handed manner without repercussions. This type of behavior is appalling and undermines public confidence in lending institutions.”
Phil Jemmett, CEO of Breakwater, says that LSREF2 Oreo (Direct) LLC will have to return the property to the earlier owners and that the firm will be looking into how the property has been managed since the judgment to see if there was additional damage done.
Richard Schlosser an attorney with the law firm of Bricklemyer, Smolker & Bolves PA in Tampa represented the tenant-in-common owners.
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