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Natick collection condo builders file liens

Posted by Tom Coakley  August 31, 2009 09:00 AM

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Four months after the Natick Collection’s owner filed a $27.3 billion bankruptcy case contractors for the mall’s 215-unit luxury condominiums are still in limbo and left to wonder when they’ll be paid for their work.

Silktown Roofing Inc., based in Connecticut, filed a lien on the luxury condo complex known as Nouvelle at Natick two weeks ago, another victim of General Growth Company’s bankruptcy case.

In papers filed in federal bankruptcy court in New York on Aug. 12, a lawyer for Silktown contends that they are still owed $326,039 by Dimeo Construction Co. on $2 million worth of work Dimeo was the general contractor for the mall expansion and construction, as well as the condos, and they are still owed money by General Growth.

In May of this year, Dimeo filed its own $12.6 million lien on the Nouvelle condos. The lien is still outstanding.

General Growth, Silktown, and Dimeo did not return requests for comment.

General Growth operates 200 malls in 44 states, and was forced to file for bankruptcy protection in April when it couldn’t refinance its loans and repay some of their bonds. Their case is being hammered out in court as the company tries to negotiate longer debt repayment periods to avoid liquidation.

This leaves contractors like Dimeo and Silktown with liens as their only short-term option to help secure the money they’re owed. As condo units are sold, the money can be directed to lien holders before General Growth.

But if past sales are any indication of near-future prospects, both contractors will have to wait some time for substantial relief.

Boston’s Otis & Ahearn Real Estate handled Nouvelle’s sales until about a month ago, said Kevin Ahearn, president of the company. Asked why the two parties split he said only: “We agreed to disagree.” Ahearn would not say how many condos have been sold to date. But in a January Globe article, he said only 30 units, or 14 percent, had been sold, despite incentives being offered by General Growth, such as two to three month delayed mortgage payments and a willingness to negotiate on condo fees and mortgage percentage rates.

General Growth grew from humble beginnings to one of the largest mall operators in the country, second only to Simon Property Group Inc. Founders Martin and Matthew Bucksbaum started the company’s mall operation in Cedar Rapids, Iowa, in 1954 and from there, the company grew to encompass malls across the Midwest. In 1993, the company moved its headquarters to Chicago.

The company acquired the Natick Mall in 1995 and started a radical transformation of the facility in 2004 by renovating the existing mall, adding 500,000 square feet to it, and rebranding it as the Natick Collection. In the process, General Growth positioned the mall as a go-to destination for luxury shopping in the Boston area, charging rents higher than some Newbury Street spots.

In Sept. 2007, the mall, newly-anchored by luxury department stores Neiman Marcus and Nordstrom, opened to the public. Sales at the Natick Collection had stalled even before the economy ebbed into a recession, with retailers reporting below-average consumer traffic, according to a May 2008(Cq- Jenn Abelson wrote it) Globe article.

Sales at the adjoining 12-story Nouvelle condo complex, which are priced from $479,900 for a 1,168-square-feet unit to more than $1.1 million for a 1,774-square-feet unit in the MLS database, have staggered since the condos hit the market in spring 2007. At the time, the most expensive condos were going for $1.6 million.

Whether the economy will recover enough to spur owners to buy luxury condominiums overlooking highways and a mall remains to be seen. For now, General Growth is working on a reorganization plan as part of its bankruptcy filing.

In late July, the company won a six-month extension from a bankruptcy judge to work out their reorganization details, which include reviewing thousand of contracts and tens of thousands of leases. The new reorganization deadline is Feb. 26, 2010.

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4 comments so far...
  1. Who thought building condos at a mall was a good idea in the first place? The mall? Really?? Have fun getting to and from your condo during the holiday shopping season.

    Posted by Required Name September 1, 09 10:39 AM
  1. Well, if they put stores in that additional wing that people can shop at, maybe they wouldn't have a problem.

    I avoid that entire new wing because I know there's not a single store with affordable merchandise.

    A condo in Natick isn't worth close to $500,000 for an average place, even if it's inside of the mall.

    Posted by YouAreAllMySons September 1, 09 11:09 AM
  1. Yeah, sign me up for a $1.6 million 'luxury' white featureless box with ugly lighting, let me pay monthly rent for it *in addition* to my huge mortgage, and have mall traffic as my constant companion. Plus, I would like to live in the middle of nowhere.

    Seriously. I mean, seriously.

    Apparently, they are being auctioned off now to pay the owners' debts. I wouldn't pay $200k for one. They are ugly and are in a mall. End of story.

    Posted by Diamond September 10, 09 03:55 PM
  1. They built them about 10 miles from Newton or Brookline, Ma where they would have had a target market of buyers that are looking for condos of this size and type because there is a limit on stand alone housing. The price premium for condos in those areas exist because there is a dense population, they provide plenty of local restaurants, bars, places to work and things to do that you can get to on foot or by decent (compared to Natick) public transportation. Even in that location they were priced high, even before the market collapsed. Come on people, you didn't build them in Manhattan, don't price them as such.

    Natick isn't that far from the city but when you're trying to sell shared wall boxes to live in with condo fees, don't forget that you can buy a house that is the same size or larger in that same town that does not have the condo fee or the shared walls. Most people that live in Boston almost think of Natick as Western Mass. I guess to give the builder some credit, I guess they didn't build them in Springfield, Ma and try to pitch them as being near a highway that can get you to Boston eventually, but 10 miles to Boston for a place that costs that much is still way overpriced.

    The lesson: know your market before you build something for which there is minimal to no buyers at the price that you are asking.

    Posted by C:\hris September 11, 09 03:52 AM