MMPI in Default on High Point Loan
By Furniture Today Staff -- Gifts and Dec, 5/7/2010 8:00:00 AM
High Point — Merchandise Mart Properties Inc.'s parent company is in default on its $217 million mortgage on its High Point showroom building complex, it reported in a financial filing this week.
An MMPI executive told a newspaper that the situation hasn't affected tenants, vendors or employees, and that the buildings continue to operate as usual.
Vornado Realty Trust, parent company of MMPI, reported in its first-quarter financial statement to the Securities and Exchange Commission, "In March 2010, we requested that the High Point Complex mortgage loan be placed with the special servicer. We have not made debt service payments since March and are in default. We are in negotiations with the special servicer; there can be no assurance as to the timing and ultimate resolution of these negotiations."
The loan carries an interest rate of 10.35 percent, which is higher than the rates on other MMPI properties, Vornado reported.
According to the Triad Business Journal, the occupancy rate at Vornado's High Point properties fell from 94.5 percent in 2007 to 86.5 percent in 2009. Average initial rents also fell by 20 percent from 2008 to 2009, the steepest drop at any of Vornado's showroom properties. These figures reflect the effects of the downturn in the economy and housing markets on the furniture-related business.
Myron Maurer, an MMPI senior vice president in Chicago, told the High Point Enterprise that the financial issues haven't affected operations of the High Point properties. "It's business as usual. We had a very successful April market and are looking forward to October. We are excited to be in High Point," he told the paper.
Asked if Vornado or MMPI would consider selling the High Point holdings or walking away from the loan, Maurer told the Enterprise the company was "continuing business as usual."
In High Point, MMPI manages about 2.1 million square feet of showroom space that includes 305 West High, Hamilton Market, Market Square, Plaza Suites, Furniture Plaza, the National Furniture Mart and the Suites at Market Square. It is the second-largest showroom owner after the International Home Furnishings Center.
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