One of the trendiest new condo complexes in one of the city's trendiest neighborhoods—Northern Liberties—is going to Sheriff's sale, according to Philly.com. Just like troubled homeowners, the developer is facing foreclosure, so the lender will auction off the property to the highest bidder.
American Loft has a sleek, cool design that lets it "hover" rather than sit at the corner of North American and Brown Streets. It was designed as an environmentally-friendly building that would be sophisticated and blend into the art and culture that really defines the NoLibs area.
Now the 11-story building is headed to Philadelphia Sheriff's sale. The developer, Gagandeep Lakhmna, couldn't sell enough units priced from $329,000 to $1,479,000. The lender is looking for someone to put up at least $15.1 million to cover the balance on the loan, according to the report.
Creative Real Estate Innovations (CREI) is Lakhmna's company.
The YouTube promotional video we found gives you the best look of what type of feel and function are envisioned for the luxury condos.
The economy has put a financial strain on CREI as well as other developers.
"How many units a developer has to sell to reach the break-even point depends on the amount of the loan," said Philadelphia developer Carl Dranoff. "Typically, lenders have been willing to provide 75 percent of the project's value, but mezzanine financing can boost that to 90 percent," Dranoff told the Inquirer. Mezzanine financing is similar to a second mortgage in residential real estate. The debt is secured by the amount of equity the borrowers has in property. "That means that it can be 75 percent or 90 percent of the units before the loan is paid," he said.
Right now, the building is more than half sold.
We found another YouTube video posted just over a year ago that walks you through one of the units under construction.
The 40 units are empty right now and Lakhmna may be back in his homeland of India.
Neighborhood leaders don't see the Sheriff's sale as an omen that things might be headed in the same direction of the late 80's when the housing bust hit, bringing the area's growth to a screeching halt.
"While we don't want to see empty buildings or Sheriff's sales, this is not a sign that this neighborhood will not continue to grow and thrive," Matthew Ruben, president of the Northern Liberties Neighborhood Association, said in the report.