Clark County District Court Judge Rob Bare on Monday denied a preliminary injunction to block the foreclosure sale of a medical office building at 2716 N. Tenaya Way and appointed a receiver for the property, which is in default on a $50.7 million loan.
Bare said he found no “smoking gun” indicating fraud as alleged by tenant-in-common investors who purchased the 200,000 square-foot medical office building for
$74 million in 2006. Investors were unable to refinance a $50.7 million bank loan that came due last August because the building had lost value and they weren’t able to extend a lease with sole tenant United HealthCare Services.
Bare said injunctive relief is “moot” because it’s going to take 30 days to fix any problems with the affidavits of authority to foreclose and another 90 days for the notice of trustee sale.
Attorneys for the investors now have 120 days to find evidence to support their contention that LNR Partners, special servicer of the loan, had interfered with lease negotiations between the landlord and the building tenant.
The investors had hoped to extend the 15-year lease with UHS, which expires in 2016, in hopes that Wells Fargo would consider refinancing the loan. The bank rejected refinance applications because the building was most recently appraised for about $46 million, well below the loan amount.
Bare also ruled against investor allegations of misrepresentation in the private placement memorandum given to the investors. Bare said the placement memorandum adequately disclosed inherent risks involved in the investment, including potential loss of value and inability to refinance after the five-year term of the loan.
Phillip Wang, representing LNR and the trust holding the note to the property, said the investors failed to satisfy the standards to warrant injunctive relief, and that all of the loan assignments are in order.
The loan was originated by Wachovia Bank in 2006, and eventually became part of a $2 billion commercial mortgage-backed security with Wells Fargo as the master servicer. It was turned over to LNR for special servicing in August.
“They want to delay the foreclosure,” Wang said. “They want to keep the property. That’s what they say is equitable. I’m sorry, it’s not equitable. There is no need for discovery at all. They have all the documents they need. All they’re trying to do is delay the foreclosure.”
Wang said any investor claims would be better directed at Wachovia and Triple Net Properties, the sponsor for the tenant-in-common 1031 exchange, which exempts sellers of commercial properties from capital gains taxes if they invest in similar properties.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.