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Westgate Center Dodges Technical Default

The San Leandro shopping center anchored by Wal-Mart was set to be auctioned on the courthouse steps before the owner refinanced a $32.5 million loan in the nick of time.

 

When families go into default their homes can be sold on the courthouse steps.

The owners of San Leandro's Westgate Center narrowly averted that same indignity when they refinanced a $32.5 million loan just in time to avoid a January 2 auction outside the Alameda County Courthouse.

But according to Robert D. Scanlan of SKB-Westgate Investments, a Portland company that owns the property west of the Davis Street exit on Interstate 880, it wasn't like a home default.

"When you talk to someone in a bar and they hear that a property's gone into default they think it was because the poor guy didn't pay his mortgage," Scanlan said. "This wasn't like that. We were never in economic default."

Instead, the property flirted with foreclosure due to legal complications arising from a sale gone sour, according to Scanlan's account.

Commercial Real Estate 101

SKB-Westgate is a firm that raises money from investors and buys commercial properties. Over the past 20 years, SKB has bought and resold properties within three to five years, earning fast profits for the original investors.

SKB purchased Westgate Center in 2004 with the same timetable in mind. Then came the financial meltdown. Real estate prices plunged. It wasn't until spring of 2012, Scanlan said, that the firm felt like it could get a decent return on its investment.

So SKB found a buyer and entered into a deal to sell the property. But Scanlan said that deal went sour. The parties ended up in court. All of this happened at just the same time that the loan on Westgate Center was coming due.

Lender Plays Hardball

According to Scanlan, the legal cloud over the property prompted the lender -- CW Capital -- to issue a legal notice that set a January 2 date to auction the property to the highest bidder.

Former Mayor Tony Santos was among those who noticed the threatened sale. He emailed Patch Friday morning: "This should be a big story in town, but local press seem unaware of this, including you."

But Scanlan said the January 2 auction will not occur. His firm refinanced the $32.5 million loan to avert the technical default arising from the lawsuit and loan term coming at the same time.

Westgate's owners must still finish up the paperwork on their refinancing. Meanwhile, the auction has not been cancelled, merely postponed until January 16 -- in the unlikely event that SKB fails to dot all the i's and cross all the t's.

In that event, the giant shopping center could still be sold "at the Fallon Street emergency exit to the Alameda County Courthouse, 1225 Fallon St. Oakland," as the legal notice says.

If that comes to pass and you decide to bid, come with a big, registered check.

"I'd say this property is worth between $40 million and $45 million," Scanlan told Patch Friday.

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tony santos December 31, 2012 at 02:26 AM
to best of my knowledge, crime at center no different than at any other shopping center; if anyone knows differently, advise. Also reason matter is important to City is the amount of tax dollars earned, so City must keep up with what goes on at shopping centers-our livelyhood depens on it.
Marga Lacabe December 31, 2012 at 07:43 PM
And, in case we forget, Tony was one of Walmart's main advocates when they sought to move into that property. It would seem that Tony wants to make sure they stay in town.
tony santos January 01, 2013 at 08:56 PM
Not true Marga- as usual you have your facts wrong-I was not on the Council when Walmart came to town-Costco was original tenant and moved later; I was not on the Council at the time of Costco's move to its present location-if you had checked further, you would have learned I opposed Walmart opening at Lewelling; however, that property was zoned to allow Walmart to be there. I demonstrated against Walmart more times then you ever did, including many times in Oakland-check with Dan Rush of local 5 for details. I was there several times with Dellums and Garemente.
Marga Lacabe January 01, 2013 at 09:13 PM
You are right, Tony, you were not on the Council. But you did go to the City Council meeting to urge the City Council to vote to allow Walmart to come to town. I had this very discussion with your son, Mike, on the Patch a couple of years ago, where he made your same false claim. Alas, the minutes of the 1998 City Council meeting are clear about your support of Walmart. You can read them yourself here: http://weblink.sanleandro.org/publicweblink8/DocView.aspx?id=234613&dbid=0
Fran January 01, 2013 at 10:33 PM
Yikes, things are worse than I thought, if our livelihood is dependent upon a shopping mall. LMAO. No need to fret Tony, I'm sure it isn't going anywhere. When I'm unlucky enough to have to bring my son to Sports Authority for something, I do pop into See's Candy to make the horrendous experience a little more bearable.

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