If there is one topic being discussed this week collectively among the downtown real estate community, it's the fate of the city's landmark First National Center.
For the past three months the ownership, led by Milbank Real Estate Chief Executive Officer Aaron Yashouafar, has bought off extensions from lender Capmark Group in a bid to get more time to find $12 million to pay off what was a $21 million mortgage.
Capmark itself is under court order to liquidate, and gave Yashouafar what was seen as a great deal by offering to cut the debt almost in half if it could get back the full $12 million.
The latest extension is set to expire at 5 p.m. today, with the attorney Rob Robertson promising there will be no more extensions if the $12 million isn't paid in full.
But in this ongoing game, down payments from Yashouafar have bought extensions each of the last three months. Who is to say another payment won't buy more time, despite Robertson's public pronouncements?
One can look back to the start of this situation starting way back when Yashouafar agreed to pay $21 million for the property — far more than what locals felt it was worth. But Yashouafar came in with grand promises that he would restore the property to Class A status. He challenged locals to watch his deeds.
Those deeds were watched. Locals saw Yashouafar spend some money on life-safety systems critical to keeping the property from being shut down by city code inspectors. He engaged in a controversial renovation of the ground floor retail arcade that tore up the original marble floor in the historic west tower (the remainder of the renovation remains unfinished).
Rent disputes were blamed for the loss of longtime retailers and other tenants. Yashouafar even faced liens filed against him by his former public relations firm, Saxum, over unpaid bills. All in all, it's safe to say Yashouafar is not the most popular property owner in the central business district.
Even after the building went into foreclosure and then bankruptcy, Yashouafar denied he paid too much for First National. But if it were really still worth $21 million, why is it so difficult to find $12 million in financing to pay off the greatly discounted loan?
More questions arise as this drama continues. Yashouafar this summer pleaded guilty to felony embezzlement charges related to a senior-housing complex in Nevada. He faces up to 10 years in prison and must pay $1 million in restitution.
Capmark Group did not face any public scrutiny when it lent $21 million for a property that locals valued at no more than $8 million. A lender that might give money to an admitted felon for a property, still deemed by some as being overvalued at $12 million, might face questioning by locals and investors alike.
At least four significant investment groups are awaiting the close of business today and hope that Capmark's extensions are over and that the property goes into receivership Wednesday morning. Should Yashouafar prevail, the questions shift to the future of First National Center: how will he afford to invest the money necessary to turn it around after two decades of turmoil? How will the bills get paid when the tenant paying half of the property's rental revenue, Devon Energy Corp., ends its lease next year? What will be the building's fate if Yashouafar goes to prison? Locals are paying attention and they don't like what they're seeing.