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Moore Sorrento gets $39M offer for shopping center

by Hayley Kaplan | Published July 26, 2012 at 3:44 PM

After its previous sale to Inland Real Estate Acquisitions Inc. fell through, shopping center owner Moore Sorrento LLC is trying again.

Judge Russell F. Nelms of the U.S. Bankruptcy Court for the Northern District of Texas in Fort Worth was set on the afternoon of Thursday, July 26, to consider the private sale of the Moore, Okla., company.

Under Moore Sorrento's sale motion, filed July 17, the debtor proposes to sell a portion of its Shops at Moore to Inland for $38.75 million cash. The debtor would retain a portion of the shopping center that it plans to reconstruct with cash contributions from its equity holders.

The Shops at Moore houses 23 retail tenants, including a Best Buy, Office Depot and PetSmart.

Nelms on May 10 approved a prior sale motion for a portion of the Shops at Moore. The previous sale to Inland failed to close, however, after the buyer requested that certain terms of its asset purchase agreement be renegotiated and the debtor refused. Inland then terminated the APA on May 30.

Inland had originally committed $39.35 million cash for the property.

Moore Sorrento's current sale of the Shops at Moore would close by Aug. 1, court documents said.

Inland has already deposited $1 million toward the purchase.

Secured lender Wells Fargo Bank NA would receive a net cash payment of $37.23 million from the sale.

Nelms on May 15 confirmed Moore Sorrento's reorganization plan, which provides for the sale of the debtor's property and reorganization of its remaining assets. Court documents said the confirmation order became null and void due to the debtor's failure to close the sale by May 31. Because the closing deadline has now been extended by the parties' agreement, however, Nelms' confirmation order has been reinstated, court documents said, and the debtor will file a post-confirmation modification to the plan.

Nelms approved the debtor's disclosure statement on Jan. 9.

Moore Sorrento's second amended reorganization plan, filed April 24, incorporates the sale of the Shops at Moore free and clear of liens.

Under the plan, Wells Fargo's claim will be settled through the sale of the Shops at Moore.

Moore Sorrento took out two secured construction loans on Nov. 7, 2007, from Wachovia Financial Services Inc., totaling $35.24 million and $6.5 million. (Wells Fargo bought Wachovia in 2008.) The loans were originally to mature on Nov. 6, 2009, before the lender agreed to extend the financings until June 30.

Holders of convenience claims, owed $385, will be paid in full in cash 60 days following the effective date.

General unsecured creditors, owed $507,767, will be paid monthly over five years without interest beginning three months following the effective date.

Holders of secured tax claims, owed $270,000, will be paid monthly over five years beginning one month after the effective date.

Insider claims of $973,062 will be wiped out.

Equity holders will retain their interests in exchange for a $1 million contribution on the effective date from the Lippman and Collins families. Moore Sorrento would use the funds to finish construction of the retained portion of its property.

The company's equity holders include Burk Collins (with a 47.5% stake), William Lippman (44%), Wendy Lippman (5%), L. Dwayne Collins (2.5%) and Yellow Road LLC (1%).

Moore Sorrento tried to refinance its debt due to Wells Fargo or sell its assets to repay the loan before it matured. The company couldn't do either. And even though Moore Sorrento had made monthly interest payments on the loans following maturity, Wells Fargo refused to extend or renew them. Instead, the lender commenced foreclosure proceedings against Moore Sorrento on July 18, 2011, hoping to have a receiver appointed to run the shopping center.

Moore Sorrento responded by filing a Chapter 11 petition on Aug. 17, staying the foreclosure.

The company listed $43.26 million in assets and $42.26 million in liabilities in court papers.

Potential purchaser Inland is the purchasing arm of Oakbrook, Ill., commercial real estate and finance company Inland Real Estate Group of Cos. Inland has completed 1,159 transactions totaling more than $17 billion since January 2005, according to its website. In July alone it has purchased Saxon Crossing Shopping Center in Orange City, Fla., for $20.73 million and South Elgin Commons in Elgin, Ill., for about $25 million, as well as nine Walgreen Co. stores for $68.7 million and the North American headquarters of Siemens AG's gas turbine division for roughly $17.8 million.

Inland companies manage 129.3 million square feet of commercial properties in 48 states, have extended more than $18.8 billion in mortgage financing and service $9.5 billion in loans.

J. Robert Forshey of Forshey & Prostok LLP is debtor counsel. UCR Investment Sales is the debtor's real estate broker.

J. Frasher Murphy and Sean B. Davis of Winstead PC represent Wells Fargo.

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