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Fremont News of the Afternoon

fremontFrom the cops:

Folks called the cops when they saw a male armed with a rifle on the roof of a Grimmer Boulevard building. But we’ve seen this movie before. The gunman was 15 and the gun shot pellets. Cops arrested the kid and released him to his parents.  ** Note: I’m thinking it’s South Grimmer Boulevard.

From our business reporter:

Cisco is bying up land in Fremont

From the world of redevelopment:
San Jose’s redevelopment bonds were downgraded.

From the Ohlone Monitor:
Ohlone faculty among best compensated in the state.

Matt Artz

  • James

    So it looks like Cisco exercised it’s option to purchase the land at the planned Pacific Commons office park from Catellus. The shopping center, including the proposed expansion parcel, was recently sold by Catellus to Texas Pacific Group.

  • VOR

    Texas Pacific Group now TPG Capital. Interesting to note they handle distressed companies. Was Catellus considered distressed?

    http://en.wikipedia.org/wiki/TPG_Capital

  • James

    How is the Pacific Commons retail center distressed?

  • bbox231

    One [retty commonly held definition of “distressed” is when present value of the originally agreed upon financed amount (less principal paid down to date) exceeds the current market valuation . . . you’ve got a distressed asset on your hands – also thought of as “under water”.

    I have absolutely no idea where Pac Com might reside on such a continuum but you could argue that most real estate in the Bay Area financed in recent history would qualify under this kind of definition.

  • http://fcnisbacon.wordpress.com/ Marty

    A distressed property implies in default, not just underwater.

  • James

    To me, as well, destressed means in default. It certainly doesn’t seem that Pac Commons retail is distressed since the shopping center is 98% occupied and a major expansion is planned and already has at least a 60% occupancy commitment (a year before it even opens).

  • bbox231

    You’d find strong consensus for your position, if you limit your scope of discussion to strictly residential real estate.

    As you move into the realm of commercial real estate, businesses and the very broad range of commercial assets – there will be increasing consensus around the interpretation I indicated as “ONE pretty commonly held . . . ” definition – - but, you might have missed that part.

    Here is a complete hypothetical for you to consider – - – the current lessees are NOT in default, but, let’s just pretend that the original leases are coming to term and no one is expected to re-up at the rates originally agreed to in the current economy; e.g., the current leases are “under water” in comparison to the market value of the properties involved and the current tennants are reasonably expected to negotiate significantly reduced lease payments and/or relocate. .

    No one is currenlty in default – but you’ve got an “under water” asset, and involved parties are trying to get creative in hopes of keeping everything in place and viable for all those concerned. It would not be at all unusual to bring in an organization who makes a living on “distressed assets” – LOADS of folks in this sector – the range of service offerings from these folks might include a re-fi of the thing, discounted acquisition of the entire asset for their own book, or, in the worst of cases, they’ll simply choose to sit on the sidelines and wait for an eventual meltdown and pick it up for pennies on the dollar in a Ch.11 or Sec 363 or other BK event. (Not the businesses necessarilly – but the property owner/manager)

    As I said – this scenariou is purely hypothetical and I have no factual basis to presume that this might be true for Pac Com BUT – the important point is that it is THIS type of situation that, in the commercial realm, would be routinely characterized as a “distressed asset”.

  • http://fcnisbacon.wordpress.com/ Marty

    Sigh.

    http://www.businessdictionary.com/definition/distressed-property.html

    I never seen someone waste so many words for the purpose of flailing.

  • bbox231

    Maybe this is a concept that is beyond your grasp, Marty. You appear fixated on a pedestrian undersanding and, seemingly, do not want to embrace some incremental knowledge. .

    In the commercial sector, (which is the realm of the original discussion), the phrase distressed assets means many things. There are many folks who even make a living managing, trading, buying and mitigating distressed assets. One possible outcome is liquidation – but, by no means is the term “distressed asset” reserved for only residential properties in default.

    But, dont take my word for it – - – here’s a company (one of a great many, I might add) that considers a broad array of possible outcomes for commercial distressed assets . . take careful note at the wide range of workout end-results – - –

    http://www.youtube.com/watch?v=CxBBfqfsuz0

  • http://fcnisbacon.wordpress.com/2010/11/03/parting-gifts-for-election-losers/ Marty

    By your definition, a fat man siting on a roof makes that property distressed.

    In financial terms, a distressed property means the property is in default, period.

    I’ll link this thread in an email to my commercial broker friend and get his take.

  • http://fcnisbacon.wordpress.com/2010/11/03/parting-gifts-for-election-losers/ Marty

    His response:

    “Distressed has always referred to holdings where the owner is literally forced to sell, primarily because they can no longer service the debt. Of course there are strategic defaults all the time where the owner is not forced per se. But the end result is the same; the holding is turned over to the bank.”

    Take this opportunity to learn something, Mr. Box.

  • bbox231

    Save your breath, Marty.

    There are loads of folks like Sperry Van Ness whos promotional video I’ve linked to above – who make a living operating in the kinds of assets you and your buddy seemingly know nothing about.

  • bbox231

    P.S. –

    When is “..forced to sell…” – NOT – “..in default..”

    Certainly those who are in default will likely be forced to sell – - but, those who are motivated to sell properties DO SO FOR A WIDE VARIETY OF REASONS – which are not exclusively limited to foreclosure.

    My apologies to your buddy, Marty.

    The explanation he offered you is a actually a rather wide chasm beyond your original assertion.