28 Rented, 24 Sold: What’s REALLY Happening Over at the Palomar?

Last week Dallas Morning News real estate editor Steve Brown shook the Dallas condo market world when he wrote that “Lenders may take Palomar condo tower”. He said that since last year, “Behringer Harvard has been trying  to renegotiate the debt on the Residences at Palomar condo building.” The news was that one of Behringer Harvard’s funds missed a $3 million payment in early 2011 on both the Palomar Residences and a Colorado project. What this means is that the lenders, a credit union under the control of federal regulators, could get testy and snatch the unsold units in its Residences at Palomar condominium building in Dallas.

I flew to the phone and called Adam Hignite, who is marketing the residences with Allie Beth Urban. His line was burning up with people assuming that the Palomar was going back to renting when it had in fact launched major price reductions and a sales program last July. Units have been decked out by designer Mark Godson and have been moving. Not flying off the shelves, but moving. Here’s what Adam said:

The Palomar going back to rentals? WRONG! Behringer Harvard is very focused on finding someone to pay off the entire underlying mortgage to take Texans Credit Union, which is under the control of federal regulators, out of the picture, which would be a good thing for the building. That would bring in a new developer as a partner, says Adam, and all financial issues will be wiped away at that point.

The Palomar units are still for sale, and not being converted to rentals. Over next couple months, the Allie Beth Urban team hopes to have good news to report on the new financial partner. Meantime 26 units of 39 are rented, not  46 as Steve reported, and a total of 24 are sold. That’s 33% of the building sold. Six sales have been made since spring. The one and two bedroom homes overlooking the pool are the most popular units. And pricing? In 2007 prices were just under $400 a square foot, now they are down to $210 and $230.  Texans Credit Union held the original mortgage, now the NCUA holds it under Credit Liquidity Services. Here’s more from Steve:

The Addison-based real estate firm has been negotiating since early last year with the mortgage holder on the building at Mockingbird Lane and North Central Expressway.

The project lender, which is under control of regulators, has now demanded full and immediate repayment of the entire debt.

“Conversations with the lender still continue,” said M. Jason Mattox, chief operating officer of Behringer Harvard. “We were in negotiations on a recapitalization and only learned very recently that it was not going to be acceptable.”