Most Florida building owners who own multiple tenant properties understand the importance of keeping occupancy rates as high as possible. Income generated from rental properties is often used to help offset mortgage payments on multiple dwelling properties. Thus, a significant drop in occupancy rate could result in financial instability for that particular property owner. This appears to have been at least part of the problem regarding a 725,000-square foot business development in another state that is now headed for foreclosure.
The property was purchased in 2007 for a little over $40 million. The commercial property housed a technology park and several other business tenants. Approximately two years ago, there were more than 4,000 people working in the development.
With more than $39 million remaining on the mortgage principal, the owner defaulted on the loan, and the lender filed a foreclosure petition. A spokesperson for the lender said the situation will most likely end with a marshal’s sale, which is much the same as a sheriff’s sale in other regions. It basically means the lender will acquire ownership of the property.
For at least 10 years or so, the occupancy rate for this particular property was approximately 80 percent. Some say the drop to 60 percent occurred because many tenants chose to downside and owners were unable to bring in new tenants — this was apparently a major causal factor in the financial problems that led to foreclosure. Property owners in Florida concerned with similar issues may want to seek experienced guidance from an attorney well versed in real estate law.
Source: theadvocate.com, “Bon Carre Business Center facing foreclosure owing $39 million on defaulted loan“, Sam Karlin, Timothy Boone, April 5, 2018
