Seaport Village in Bankruptcy, May Be Sold
Seaport Village, a small waterfront shopping complex that has been plagued in recent years by financial woes, could have a new owner on tap by late August, according to a court-appointed bankruptcy trustee.
The cluster of specialty shops and restaurants adjacent to the Long Beach Marina on the eastern edge of Alamitos Bay filed for protection from its creditors in a Chapter 11 bankruptcy proceeding in late May.
Joseph C. Karol, the bankruptcy trustee overseeing operation of Seaport Village, said a sale of the shopping complex is the best way to resolve the center’s financial troubles. Karol said he will solicit offers as part of the bankruptcy proceedings.
“By the end of August, I’m hoping to have something in escrow,” said Karol, president of a Torrance-based firm that specializes in bankruptcy reorganizations. “I think the way to resolve this case is by sale of the property.”
The City of Long Beach, which owns the land, receives a flat rent and a percentage of profits in its lease with Seaport Village, the financially strapped limited partnership that owns the complex.
Karol already has one offer to consider for the shopping complex, which has about 39,000 square feet of retail and restaurant space.
Cal State Associates, a property management and tax firm also based in Torrance, has bid about $3.4 million for the center. That deal went into escrow May 1, but has been stalled since the bankruptcy proceedings began.
Although Karol has the power to accept Cal State’s offer, the bankruptcy trustee has decided to have the property appraised and then consider bids from all interested buyers.
Built in the late 1960s, Seaport Village had been relatively successful until recent years. In 1978, the center grossed more than $1.2 million, but sales plummeted to about $200,000 in 1983.
That decline in revenue led to a series of foreclosure threats. Ronald Safren, managing partner of the company that operates Seaport Village, was able to avoid foreclosure but ultimately had to file in federal court under Chapter 11. (That provision of bankruptcy law protects a business from its creditors, giving the company time to reorganize its finances.) Although the three restaurants at the center have done well, the specialty shops have failed to attract a steady stream of customers and many have moved. Only half of the shops in the complex are now occupied.
The City of Long Beach, which leases the land to Safren, has a stake in the fortunes of the shopping center. Under a 60-year agreement, the city receives a base fee of $26,700 a year in rent and varying percentages of income from the shopping center’s 3 restaurants and 15 shops. There are 44 years left on the lease.
Carolyn Sutter, general manager of the city’s Tidelands Agency, said that besides Cal State, six other firms have expressed interest in Seaport Village. But, unlike Karol, Sutter said she does not expect swift resolution of Seaport Village’s troubles.
“It’s a mess, it really is,” Sutter said. Besides the financial problems, maintenance at the center has fallen off in recent years, she said.
Legal Troubles
In addition, legal troubles have surfaced that could pose problems for a sale. Sutter said a recently opened nightclub has a lease that is technically invalid, while the center has yet to get the required permits for an 814-foot dock that was built in late 1983.
Karol said, however, that he feels those troubles can be ironed out.
“I think those are resolvable problems,” he said. “I don’t think any problem, either perceived or actual, will stand in the way of the sale.”
Nonetheless, a Cal State Associates official expressed frustration over the maze of financial and technical problems that have stood in the way of the sale.
“It’s progressing slower than I would like,” said Paul Brewer, the firm’s vice president. “I had planned on closing this a long time ago, but one problem after another creeps up.”
Improvements Envisioned
If Cal State succeeds in purchasing the property, Brewer said the firm would probably invest more than $250,000 in improvements, primarily to expand parking by paving a strip of land adjacent to the center.
“It’s going to take a good year, year and a half to straighten out the project,” Brewer said. “It needs some money poured into it.”
But he said the complex has potential.
“It’s a unique property,” Brewer said. “There’s only so many marinas on all the California coast.”
