Bank May Foreclose on Koll Co. Tower : Financing: The developer and the Resolution Trust Corp. had asked Wells Fargo Bank to extend the $51-million construction loan.
NEWPORT BEACH — Koll Co. said on Friday that Wells Fargo Bank has refused to refinance the loan on a 12-story office tower at Koll Center Irvine North and will probably foreclose on the building.
The developer and the Resolution Trust Corp. had asked the bank to extend the $51-million construction loan beyond its June, 1992, maturity date. But lenders generally have been reluctant to refinance office buildings to repay construction loans that were made several years ago, often because the values of the buildings have fallen.
“We were not able to refinance to an amount sufficient to repay the loan,†said Richard Ortwein, president of the Southern California division of Koll Co. “There were a number of different factors we were not able to do, and the three parties could not agree on terms to go forward.â€
Koll’s original partner in the project, Columbia Savings & Loan Assn., was seized by federal regulators in March, 1991. That left Koll, based in Newport Beach, as a partner with the RTC, the federal agency formed to liquidate failed thrifts.
Wells Fargo officials would not comment Friday, and an RTC spokesman could not be reached.
Koll officials, however, said the bank will foreclose on the office tower on Monday. Neither the RTC nor Koll will contest the action, the company said.
The foreclosure will have no financial effect on Koll because the developer’s original financial partner, Columbia Savings, assumed the risk when the building was constructed in 1988.
Koll provided management and development expertise; it would have collected profits only after the original investment was returned. Koll structures such partnerships in all of its office developments, Ortwein said, so that there is “no downside exposure.â€
The 280,000-square-foot building, which bears the name of Texas Instruments, a primary tenant, is 90% leased, but rents have been lower than expected because of a glut of office space. Space in the building now rents for an average of $1.50 a square foot--25% less than originally projected, Ortwein said.
Koll will continue to manage and lease the building, as well as a twin office tower that is not affected by the foreclosure, Ortwein said.
Koll Center Irvine North also includes two hotels, three restaurants and a sports club.
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