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They already owned $45M of the building through being the lender. When you add the $6.5M, they paid about $52M total. The middleman then took a $10M loss (16%)
by danans 2y ago
They already owned $45M of the building through being the lender. When you add the $6.5M, they paid about $52M total. The middleman then took a $10M loss (16%).
That's a significant loss, but the valuation of the building is nowhere near $6.5M, and the tax assessor knows that (i.e. from comparables), so the new title holder won't be able to claim that as a property tax basis.
- s1artibartfast 2y agoThat would explain a lot! Do commercial re lenders typically have to buy out the mortgage holders when they foreclose?
- danans 2y agoI don't know if they usually do that, but I could see it as some kind of deal that preserves good will for future business they might do together. My guess is that there's quite a fuzzy distinction between commercial real estate lenders and investors, and that the roles are often reversed depending on the situation. That is in contrast with home mortgage lending, where the borrowers are very unlikely to be lenders.