Firm: Mortgage issues shouldn’t affect Hermantown townhome residentsAn official with a national real-estate firm said Tuesday that residents of Deerfield Luxury Townhomes in Hermantown shouldn’t be affected while it negotiates with the property owner over a defaulted mortgage note.
By: Candace Renalls, Duluth News Tribune
An official with a national real-estate firm said Tuesday that residents of Deerfield Luxury Townhomes in Hermantown shouldn’t be affected while it negotiates with the property owner over a defaulted mortgage note.
Except they may see better service.
“We’re not running the property,” Kevin Finkel of Resource Real Estate Inc. said. “But as a lender, we have the responsibility to make sure the property is running well.”
Property owner Empirian Property Management Inc. of Montvale, N.J., had gotten behind on its mortgage payments on the 166-unit rental complex at Maple Grove and Stebner roads. Resource Real Estate became its lender, it was announced this week, when it purchased the defaulted mortgage note for $10.3 million, a nearly 50 percent discount on the $19.7 million outstanding loan balance.
“Historically, when loans get into default, we often see borrowers not spending money on property that the residents would like,” Finkel, Resource Real Estate’s executive vice president, said. “We generally have a very positive impact on properties. Generally, residents can expect improvement in services.”
While the Philadelphia-based real-estate firm could end up foreclosing on the property built on 20 acres in 1993, it first will attempt to settle the note with the property owner for an amount between the $10.3 million and $19.7 million or reformulate the loan at a lower interest rate.
“We believe there is a way to resolve this note that is profitable to us,” Finkel said.
On Monday a publicist for the company told the News Tribune that the firm planned to acquire the property, do upgrades and then resell it.
But while the firm often sells properties it takes over, it doesn’t plan to do that with Deerfield townhomes if the company ends up foreclosing on it, Finkel said.
“In our past, reselling has happened,” he said. “But this will not be a quick-sell property.”
If his company takes ownership, it will hold onto Deerfield for at least two years and probably longer, Finkel said, noting that company officials like the property, its location and the Duluth-area market.
“This is a very strong piece of real estate,” he said.
He also said people like to live in townhomes like these, which offer a pool, fitness center and clubhouse. And the Duluth area doesn’t have many of them.
As property owners, Finkel said they would determine what improvements are needed. Turning the units into condominiums isn’t likely since the rental housing market is strong nationwide while the condo market is weak, he said.
“We think it’s at its highest and best use as rental townhomes,” he said.