Breakwater Restructures Debt on Troubled TIC Omaha Office Building

OMAHA, NEB.—Breakwater Equity Partners has restructured the debt on Embassy Plaza, a three-story, multi-tenant office building located in Omaha, Neb. The 132,000-sq.-ft. building is owned by 22 individual tenant-in-common investors who invested in the property as a source of retirement income.

Purchased in 2004 for $17 million, the investors were unable to refinance the property when the loan matured in November 2011. The lender forced the owners to suspend dividends in 2009. By the time the loan reached its maturity date the property value had declined significantly; the lender was unwilling to extend the loan, declared a default and began foreclosure processes.

“When the lender stopped the dividends we knew that the property was in trouble,” said Robert Bartley, a member of the steering committee for Embassy Plaza. “We hired a couple of different law firms and a mortgage broker; when they failed, we hired Breakwater to save our investment. We couldn’t afford to lose all that money.”

Breakwater was hired and performed an analysis of the investment, including potential litigation claims, property economics and possible bankruptcy reorganization strategies. Breakwater recommended that the investors convert from a tenant-in-common ownership structure to an L.L.C. ownership structure.

Breakwater was then successfully able to negotiate with the lender to reduce the loan payoff and provided the loan guarantees necessary to secure new long-term financing at a 5 percent interest rate.

Dividend distributions to the investors will be reinstated within 60 days.

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