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I actually work F/T at the epicentre since it has opened and seriously worried about its future? Will it eventually have new ownership or one day will the epicentre be completely something else? Will Afshin be able to keep to epicentre through reconstructuring the loan or is this just non-sense at this point and just normal procedure? I'm just very worried since I have a family to support and very happy with my job? I just don't know how all this works? Thanks for your help guys!
There have been a number of recent instances where high dollar developments such as this was foreclosed on by the lender for non-payment and the developer files Chapter 11 to thwart the foreclosure. The decision on whether the Chapter 11 will be allowed or not, in light of the foreclosure, will be up to a judge. There have been a couple of unrelated cases locally where the judge ruled against the Chapter 11, so this isn't a foregone conclusion. In fact, I believe it happened on the 210 Trade condo portion which was started above the Epicenter but which wasn't completed. The contractors and depositors lost out big time on that one.
What the real issue is here however is there isn't enough rent coming in to cover the financing costs of building the place. This is where it gets interesting in the long run because no-one will be willing to take it over if they can't make money on it.
This is where it gets interesting in the long run because no-one will be willing to take it over if they can't make money on it.
Well, Ghazi may not be able to make money on it because he has to make payments on a $90 million loan, but if it sells at auction for $40 million, it might be a good deal for the new owner.
Well, Ghazi may not be able to make money on it because he has to make payments on a $90 million loan, but if it sells at auction for $40 million, it might be a good deal for the new owner.
Exactly. That and the fact that Ghazi is loosing his shirt on several other deals, so its difficult to say if Epicentre itself is not able to carry the note.
I would not worry if I worked there or was a tenant there. The loan contains a Rent Garnishment clause which means the tenants simply start paying rent to the bank i/o Ghazi. The bank will do everything possible to keep things up and running there to make the property marketable to a buyer.
I would not be so quick to dismiss that $90M is owed over the property. It's a specter that is hanging over this place and bank and the courts are not going to just wipe this amount, or even 1/2 this amount off the books. The bank is going to do everything it can to preserve that $90M and the judge is required to make a decision that protects the creditors of the place as much as possible. This means the remedies are unknown at this point and if I were a tenant I would have cause to be concerned especially I were considering making further capital investments for improvements.
I would not be so quick to dismiss that $90M is owed over the property. It's a specter that is hanging over this place and bank and the courts are not going to just wipe this amount, or even 1/2 this amount off the books. The bank is going to do everything it can to preserve that $90M and the judge is required to make a decision that protects the creditors of the place as much as possible. This means the remedies are unknown at this point and if I were a tenant I would have cause to be concerned especially I were considering making further capital investments for improvements.
lumbollo, They can’t sell it for more than it’s worth. So if it’s only worth $40 million, that’s all the new buyer would assume. The net difference from the $90 million owned by Ghazi would have to be eaten by Regions Bank. Ghazi could liquidate and they would more than likely get first dibs at what little he has. But Regions will undoubtedly have to write much of this off.
BTW, I told you guys Ghazi was a terrible business man. This quote if from the Business Journal…
“…EpiCentre’s total rental income for July is projected as $242,567, Monthly rental income through October is estimated at $264,578. In addition, the EpiCentre collects $104,167 in monthly income from a lease with Preferred Parking…” Link: Judge OKs Ch. 11 filing for EpiCentre - Charlotte Business Journal
So in rental income, which would be his primary source of income, on average Ghazi takes in about $350,000 a month, actually just $250,000 a month from the retail tenants, or $3,000,000 a year. Sounds like a lot? Not hardly. Consider that Suite night club alone probably pulls in $150,000 a month ($25 x 500 people, at least three nights a week), or $1,800,000 a year. And that’s just my quick and dirty very conservative estimate for only one of his tenants. Looks to me like he should be getting (charging) a lot more in rental income.
.... Looks to me like he should be getting (charging) a lot more in rental income.
This is ultimately the point I was making. The rent will have to go up to reflect the financing and other costs of that place. When that happens you are going to see some closures which won't be replaced and the problem compounds itself on those left. The Epicenter was conceived, financed and built using a set of economic assumptions that never saw the light of day. Now we are seeing what happens to these unsustainable projects.
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