Saturday, July 25, 2009

Portland developer defaults

From the Oregonian:

John Beardsley, known for renovating historic downtown buildings, is Portland's first major commercial developer to see his properties move toward foreclosure amid growing problems nationwide in commercial real estate.
Since May 1, lenders have filed default notices -- the first step in a foreclosure -- on 10 properties owned by Beardsley's companies. The defaults cover loans and sales contracts originally signed for $58 million and taken out during the real estate bubble between 2003 and 2007, according to Multnomah County property and court records
Beardsley also owes the county $354,000 in back taxes, according to county records.
Until recently, Portland had largely avoided the depths of the commercial real estate problems seen in other cities. Nationally, the Federal Reserve reported that commercial real estate delinquencies are jumping quickly and hit 6.4 percent in the first quarter, the highest rate since the early 1990s.

But Beardsley's defaults and developer Tom Moyer's recent decision to halt construction of his 32-story office and condo tower, Park Avenue West, show Portland is following the same trajectory in commercial real estate as it did in the housing market: tracking national trends but arriving later to the recession.
"The bottom fell out of the market," Beardsley said. "I'm a reality of it. Tom Moyer's a reality of it. It's a very sobering time. ... This is significantly worse than the 1980s."

"To be a developer you have to be an optimist," Beardsley said. "But you cannot deny reality. There is no new money in the marketplace at all. And there's not going to be any money for a long time."