Koll Office Tower Faces Foreclosure : Real estate: Wells Fargo Bank begins proceedings against 12-story building owned by Newport Beach developer and the Resolution Trust Corp.
Unable to reach an agreement about a past-due, $51-million construction loan, Wells Fargo Bank has begun foreclosure proceedings against a 12-story office tower owned by the Koll Co. and a partner.
The tower is one of twin buildings in the Koll Center Irvine North at Main Street and MacArthur Boulevard. The complex, ironically, is also home to Wells Fargo’s Orange County headquarters.
The bank filed a default notice Friday, giving the parties 120 days to reach an agreement on the debt, said Richard Ortwein, Koll’s division president for Southern California. Other options are that the bank take over ownership of the building, Ortwein said, or that the partnership file bankruptcy to prevent such a move.
The partners are Koll, a $440-million-a-year development company based in Newport Beach, and the Resolution Trust Corp., which assumed partial ownership of the building when it seized Columbia Savings & Loan Assn., Koll’s original partner. Koll’s liability in the partnership is limited, Ortwein said, through what is called a non-recourse loan agreement.
“We want to make it clear that this will not impact the Koll Co. or any other Koll project. It is exclusive to this one building,” Ortwein said.
Wells Fargo officials could not be reached for comment.
Ortwein said he believes the bank began foreclosure proceedings to put pressure on his company to accept the bank’s terms for extending the loan.
The Irvine office tower has more than 280,000 square feet of space and is 90% leased, Koll officials said. Its tenants include Texas Instruments and Sun Microsystems.
The loan dispute began earlier this year when company Chairman Donald Koll left the board of Wells Fargo Bank’s parent company, Wells Fargo & Co. In April, Koll stepped down after the bank said it had $76 million in problem loans in his name. He said $56 million was related to the Koll Center Irvine North development.
Koll said at the time that his decision not to seek reelection to the board was unrelated to the loans but rather was because he had become too busy.
The Koll Co. has lost two projects to foreclosure procedures in the past few years: a small office building in Phoenix and a group of industrial buildings in Northern California, Ortwein said.
Ortwein blamed the company’s troubles on the economy and on pressure by federal regulators for banks to reduce their number of real estate loans.
