Bankrupt and delinquent Fremont village project is bought by lender
FREMONT â A large home and retail complex that has been the victim of a default, federal lawsuits and two bankruptcy filings has been purchased by the property’s lender.
Mission Hills Square, a housing, retail and restaurant project near Interstate 680 and Durham Road in Fremont, was purchased by a subsidiary of Los Angeles-based Parkview Financial, according to documents filed on 2 February with the Alameda County Recorder’s Office.
Parkview Financial, the project’s lender which acted through Cormack subsidiary 2501, paid $40.2 million for the property, according to county public records.
Mission Hills Square, a housing, retail and restaurant project near Interstate 680 and Durham Road in Fremont, faces an uncertain future following the lender’s purchase.
At first sight, the project seems to be a safe bet. The development benefits from a high-visibility location next to busy Interstate 680 and a residential component at a time when Bay Area housing remains in high demand.
Mission Hills Square, if built, would include 148 residential units and include 54,000 square feet of retail and restaurant space.
The project is only partially complete, according to documents filed in August 2021 with the United States bankruptcy court as well as multiple on-site observations by this news agency in 2020 and 2021. Fremont Hills Development, the principal owner and developer of property, has filed for bankruptcy cost twice, with the most recent bankruptcy court case being launched in February 2021.
Construction began in 2017, but around 2019 construction stopped and did not resume.
In 2019, an appraisal of the partially completed mixed-use complex put its value at $81.7 million, with construction not yet complete. If completed and made available to residential and commercial tenants, the project’s value would soar to $164 million, according to Joseph J. Blake & Associates’ valuation that was filed in federal bankruptcy court. .
But by March 2021, the value of the project in its incomplete phase had dropped to $24.8 million. If completed, it would be worth $138.2 million, according to a new estimate from appraisal firm Joseph Blake.
Yet, as the project lay largely neglected for about two years, construction completion may not follow a smooth path.
Many new factors have emerged between the first assessment and today, according to court documents.
âSince the June 2019 valuation, ownership and the market have changed, influenced by the following factors: (1) the COVID-19 pandemic, after which condominiums have been disadvantaged compared to single-family residences; (2) a sharp increase in material costs and an increase in labor costs; (3) the need to renew permits; (4) apprehension regarding the future condo market,â the court documents said.
Additionally, questions have been raised about current structures, according to court documents.
“The condition of existing construction resulting from potential deterioration from exposure to the elements” is a new concern, the August 2021 court filing said.
Fremont Hills Development secured two construction loans for the project: $65 million from Parkview Financial, which registered a deed of trust that uses the property as loan security; and $40 million from the Bay Area Investment Fund, which made its loan without attempting to use the property as collateral.
Significant legal uncertainties weigh on the main leaders of Fremont Hills Development.