Legacy Bank purchases Legacy Building for $11.25 million! No other bidders at foreclosure sale
Posted on Friday, November 14, 2008
A few people showed up to watch the foreclosure of the Legacy Building on Thursday, but no one showed up to bid except for Legacy National Bank.
Legacy Bank bid $11.25 million for the luxury condominium building at 401 Watson St. in Fayetteville built by Springdale developer Brandon Barber and owned by his company Lynnkohn LLC.
The foreclosure sale included 29 remaining unfinished residential units, along with restaurant and retail space. Eight residential units sold prior to foreclosure were not included in the sale.
Washington County Circuit Clerk Bette Stamps said last week that the $18.7 million in debt against the Legacy Building involves the largest foreclosure sale she’s conducted since taking office in 2001.
Legacy Bank is not the only lender facing a loss from the foreclosure sale. Three other banks — First National Bank of Fort Smith, Metropolitan National Bank and First National Bank of Green Forest — all entered into participation agreements on the loan. Participation agreements allow banks to loan more than their legal lending limit by selling part of the loan to other banks.
The banks will each share in the losses on the sale of the building on a pro-rata basis from the sale, bankers said.
The sale was previously set in August but was postponed after Lynnkohn filed for Chapter 11 bankruptcy protection. The federal court later dismissed Lynnkohn’s petition, saying there was no reasonable prospect that the company could reorganize. Patrick Swope, executive vice president for Legacy Bank, said the bank plans to sell the Legacy Building’s residential units and commercial space. The bank has not decided whether they will use a real estate agent in that effort, he said.
Besides the already sluggish real estate market, the bank faces two big challenges in selling units within the Legacy Building: limited parking and nearby competition. The Legacy Building has a total of 50 parking spaces, including 11 for current residents, six originally intended for the restaurant and two handicapped spots. Only 31 parking spots are available for the remaining 29 residential units, officials said in court proceedings prior to the sale. The Lofts at Underwood Plaza, located on the other side of Dickson Street and a little bit closer to the University of Arkansas campus than the Legacy Building, is competing for the same niche market for luxury condominiums.
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