Bank Markets Foreclosed Beverly Hills Parcel

(SEE CORRECTION BELOW) A foreclosed Beverly Hills parcel slated for the development of a luxury condominium and retail complex is expected to command less than one-quarter of the price that it traded for two years ago.

Los Angeles developer Hagop Sargisian acquired the site at 9200 Wilshire Boulevard in 2008 for $54 million. It financed the acquisition with $52 million of loans - a $31 million senior loan from troubled Broadway Bank of Chicago and a $21 million junior loan from Connaught Real Estate Finance, a Chicago fund shop headed by a Broadway director, Sean Conlon.

Sargisian, operating via his HDS Group, then navigated the cumbersome approval process needed to get the rights to build 53 luxury condominiums and 14,000 square feet of restaurant and other retail space.

But Sargisian defaulted on the loans, and Broadway foreclosed in January. When meeting with brokers in recent weeks, Broadway indicated it hoped to get as much as $25 million for the site. However, most market players think bids will come in around $12 million. CB Richard Ellis has the listing.

It's unclear whether Broadway would sell at that price. The community bank has been struggling under a mountain of failing loans. It is owned by the family of Illinois State Treasurer Alexi Giannoulias, who told the Chicago Sun-Times this month it is "quite likely" the bank will fail this year.

The 40,000-square-foot site, formerly used by a car dealer, is just outside Beverly Hill's pricey Golden Triangle district. A local developer acquired it in 2003 for $9.6 million with the intention of building an upscale hotel. But the developer ended up flipping the parcel the following year to Legacy Partners of Foster City, Calif., for about $13 million. Legacy considered developing a mixed-use project, but ended up selling the land to HDS, which came up with the plans for the seven-story condo/retail property.

CORRECTION (3/31/10): This article incorrectly described the 2008 refinancing of a parcel at 9200 Wilshire Boulevard in Beverly Hills. Broad-way Bank and Connaught Real Estate Finance teamed up to provide a $28.8 million senior loan to developer Hagop Sargisian and a partner, who had acquired the parcel in 2007 for $54 million. The article incorrectly said that Broadway supplied a $31 million senior loan and Connaught funded a $21 million mezzanine loan to finance the acquisition. Also, Connaught said it and Broadway haven't indicated pricing expectations for the parcel. The article said Broadway hoped to get up to $25 million.

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