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Case Details
P.C. v. SunTrust Bank, St. Augustine, Florida. A group of twenty-two investors owned a six-acre property including a retail center, bank, and out-parcel with financing. Original financing was based upon a debt to equity ratio of 60/40. Although cash flowing and 62% leased, the valuation of the center decreased to par with the loan value. When the loan matured, the bank did not want to renew the loan unless the investors paid down a portion of the principal amount. The investor group did not want to increase their investment, and the bank called a default and threatened to foreclose.
Additional Notes
A workout was structured with the bank that allowed for a minority group of the investors to form a NewCo to acquire the property at 75% of loan value. The NewCo group gained a majority interest in property, and the original investors were diluted but allowed to retain some value by staying in the newly structured entity.