Developers of Glendale tower seek Chapter 11.

Loan dispute looks to be a factor leading to filing

The partnership that developed downtown Glendale's tallest office tower - the 22-story 500 N. Brand Blvd. building - has sought Chapter 11 bankruptcy protection.

The filing, which would typically precede an effort to reorganize debts under the bankruptcy court's oversight, appears to be related to a dispute over repayment of the partnership's $70 million construction loan.

The limited partnership seeking bankruptcy protection is NBB Associates L.P. Its bankruptcy petition specifies that NBB's 50 percent general partner is 500 North Brand Associates II, its 1 percent general partner is Glendale MRT Realty Corp. (GP), and its 49 percent limited partner is Northbrand Equities (Ltd.P).

A petition exhibit notes that The Howard-Platz Group L.P. is a general partner of the 500 North Brand Associates group. The Business Journal recently reported that Howard-Platz, once one of Glendale's most active office developers, has been hit hard by the local commercial real estate downturn, and has lost some of its developments to lenders.

The petition lists Glendale MRT Realty and Northbrand Equities entities' addresses as care of General Electric Investment Co.

Members of L.A.'s Dunn family - of real estate brokerage Charles Dunn Co. fame - are also believed to have an interest in the NBB partnership. But sources said the GE unit, a major investment/finance operation, has taken primary control of the property.

Notice rescinded

Title records indicate that lead lender Chase Manhattan Bank, through a document recorded in county records Jan. 19, formally notified the developer that the December 1988 loan is in default. However, the notice was formally rescinded just seven days later.

The notice had specified that the outstanding principal balance on the loan, which has been modified at least two times, "became all due and payable" in December 1993. The balance then was slightly more than $69.5 million. As of Jan. 18 it was more than $74.7 million, including fees, penalties and other charges.

Local real estate sources said today's real estate capital market environment - along with depressed property values - would prohibit NBB from refinancing the loan at the current principal balance.

Some recalled that partnership representatives - GE Investment officials in particular - have been negotiating a "discounted" pay-off with Chase and its co-lenders for many months, and nearly struck an agreement.

Offer rebuffed

However, some members of the lender consortium - concluding that the GE unit could fund the full amount - refused to accept an NBB offer of between $60 million and $65 million, sources noted.

But none of that could be confirmed because an NBB spokeswoman said no partnership representative would discuss the situation, and referred all calls to NBB's bankruptcy attorneys at Streich Lang in Phoenix, who offered no further comment. Nor would Chase Manhattan representatives comment on a lender-borrower matter.

According to brokerage Cushman Realty Corp., the 1990-vintage, 415,000-square-foot 500 Brand tower is now entirely leased in the wake of a major late-1994 deal with a Warner Bros. Inc. unit.

The petition lists Cushman Realty, which earned a commission on the Warner lease, as the partnership's biggest unsecured creditor, owed more than $200,000. Charles Dunn Co., which handles leasing and management of the property, is the second biggest at more than $100,000.