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Image: Some of the properties at issue in tomorrow's auction, shown by red arrow.
The PDIG-owned properties in East Lansing’s Park District are once again scheduled to be auctioned to the highest bidder at an Ingham County Sheriff’s sale. The sale is set to happen tomorrow, Thursday, August 6. The sheriff’s weekly mortgage foreclosure auction is conducted from 10:00 to 11:00 a.m. on the third floor of the Veterans Memorial Courthouse at 313 West Kalamazoo Street in Lansing.
These properties have a complex financial history, and the auction on these properties scheduled for tomorrow will be quite different from the one that was begun and then adjourned last week, on July 30.
There currently are two mortgage loans on the PDIG-owned properties: (1) a 2013 mortgage covers the “big bank building” property at the corner of Abbot Road and Grand River Avenue, five other properties between that corner parcel and Peoples Church (although those five properties look like a single building), and a parcel with two apartment buildings at 341-345 Evergreen Avenue; (2) a 2008 loan includes all the smaller properties, but not the former big bank building. Both mortgages are held by DDR MV City Center LLC, which is affiliated with Mountain Vista Real Estate Opportunity Fund LLC.
As of today at 3:30, the Sheriff’s office had placed both of these mortgages on the auction list for August 6. Andrew Witt, Office Manager of the Ingham County Sheriff's Office Civil Division, told this reporter that bidders will be required to bid on both mortgages, since they include an overlapping list of properties.
Last week, however, only the 2008 mortgage (that does not include the bank building) was on the auction list, leaving several people who were in attendance wondering what might happen if this mortgage were sold to a developer while the lender still held the 2013 mortgage that included the same properties.
For tomorrow’s auction, the lender has set minimum bids of $7 million on the 2013 mortgage and $4 million on the 2008 mortgage. When asked if bidders would need to bring two checks to the auction—one for $7 million and the other for $4 million—Witt answered that it would be a good idea to do so, saying, “Better safe than sorry.”
The lender has signaled that it is aiming to either get a high bid on these properties or keep the properties itself for now. Not only has it set the minimum bid on the 2008 mortgage much higher than last week ($4 million compared to $2.5 million), but it also wrote in a note to the Sheriff’s office: “Lender reserves the right to increase its credit bid up to the total amount” of the indebtedness on each mortgage. The 2013 mortgage has approximately $38.5 million due, while the mortgage that excludes the bank building has approximately $4.6 million due.
The lender can pull a property from the Sheriff’s auction list up until the start of the auction at 10:00 a.m. tomorrow morning.
We reported in an article earlier today that developer DTN is planning to bid tomorrow on these properties.
As we previously reported, a six-month redemption window means that, even if someone else "wins" the auction tomorrow, PDIG could still buy back the properties and regain control of them, meaning that tomorrow's auction will not definitively set the outcome of ownership of these properties; read more.
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