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Shockoe Slip building heading to foreclosure

Michael Thompson May 31, 2016 2

The building houses a restaurant and apartments.

The building houses a restaurant and apartments.

A downtown building that’s home to apartments and a Japanese eatery is headed to the auction block.

The Shockoe-Cary Building at 19-21 S. 13th St., which sits at the corner of East Cary Street, is scheduled for a June 1 foreclosure auction at 11 a.m. on the steps of the Richmond Circuit Court, according to a legal notice. The foreclosure is a result of the four-story property’s $2.7 million loan being in default.

Built in 1877, the mixed-use building has been owned by Shockoe-Cary Building LP since 2002.

It’s unclear exactly who is behind the owning entity. Its registered agent is listed as Richard Gregory, a founder and managing partner at Fountainhead Properties. Gregory could not be reached for comment about the property.

Tom Papa, also a founder and managing partner for Fountainhead, said his firm had renovated the Shockoe-Cary Building in the past but doesn’t own it.

“It was just one of those properties that never fully recovered from 2008,” Papa said. “We just really don’t have much to do with it.”

The Shockoe-Cary Building is home to 16 apartment units and Kobe Japanese Steaks and Sushi on the ground floor. Kobe owner Ian Sun said he opened his restaurant in 2003 and is doing well. CoreRVA Properties manages the building and could not be reached for comment.

According to a report from commercial mortgage track firm Trepp, the loan on the Shockoe-Cary Building has been handled by a special servicer since March. Special servicers are typically hired by lenders and noteholders when a loan is in trouble.

The current loan for the building was issued in 2007 by Column Financial. The loan balance is currently $2.57 million and the debt is currently owned by Credit Suisse First Boston Mortgage Securities Corp.

The Trepp report states that the borrower indicated there was insufficient income from the building to cover its debt services and expenses. The report referenced a letter from the borrower that pointed to competition with newer multifamily projects.

Joseph Aronica of Duane Morris, a Washington-based firm, is the substitute trustee handling the auction.

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2 Comments »

  1. Sara Moore May 31, 2016 at 7:23 am - Reply

    I expect this to be bought on the courthouse steps by the current owners for a song. This is an old play. If you look into what happened with the Plant One Building in Manchester, the same thing occurred. I would be surprised if rent was going unpaid by the tenants, so that means that the lease money has continue to be taken by the ownership entity, but the property has been allowed to default in order to push the gambit described above. The ownership entity will be dissolved, the property will be bought back for much less than the current note, and a new ownership entity will be organized. The building will then likely go into development for a new project. Tom Papa is an expert on this tactic, as he’s done it before (nothing exactly illegal about it).

    • Sara Moore May 31, 2016 at 10:26 am - Reply

      Look who the property management company is…the same one that manages all the Fountainhead properties (there is shared ownership there). Yup. And people wonder why the economy tanked. These tactics–purposefully defaulting on debt in order to profit from the eventual collapse of a property’s financing–hurt all of us.

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