Foreclosure Lawsuit? Now? In This Market? It Still Happens, Folks
DATE: 06-18-2000
PUBLICATION: The Palm Beach Post
EDITION: FINAL 
SECTION: Business 
PAGE: 1F

The past as prologue? 

In a development reminiscent of the real estate crisis of the late 1980s and early '90s,
 lender General American Life Insurance Co. has filed a foreclosure lawsuit against the 
owners of Brandywine Centre I at 580 Village Blvd. in West Palm Beach. 

St. Louis-based General American says Brandywine Centre I Premium Partnership Ltd., 
a group that includes property manager Robert Burgess, owes $7.8 million. 

Brad Scherer, president of Atlantic Western Realty Corp. in Palm Springs, has taken
 over as the court-appointed receiver. 

The three-story, 61,000-square-foot office building is 76 percent occupied, Scherer said. 
The base rent is a reasonable $13 a square foot. 

"It's a great property," Scherer said. "For whatever reason, it's underperformed 
compared to the rest of the market. It has tremendous potential." 

The ownership group bought the building and a T.G.I. Friday's outparcel in 1989 
for $11.9 million from a group that included real estate executive Paul Hanna. 

"It would appear that they overpaid for the building," said Michael Noto, Burgess' attorney.
 "The debt is pretty significant, and that's a hard nut to crack." 

Real estate brokers are surprised by the timing of the foreclosure. 

"What's unusual about this is that you would have expected the foreclosure to have 
occurred in the early '90s," one broker said. "You would not have expected them to
survive that storm and not make it through the Year 2000. This is as good a market as it gets." 

General American modified the deal several times to make it more workable for Burgess 
and the other owners. But the group's time ran out in January, when General American 
was bought by Metropolitan Life Insurance Co., which wasn't as forgiving, sources say. 

Some experts say we could see more foreclosures as the market tightens up, but others
 insist the Brandywine building is an aberration. "This is what happens when you put 
too much debt on a property and don't write it off," one broker said.