Tonkon Facilitates Sale of Iconic Coronado Theatre
Tonkon Torp represented one of the sellers in the $5.2 million sale of the historic Vintage Village Theatre in the heart of iconic Coronado, California. The transaction included several twists worthy of a Hollywood thriller.
The parcel had been owned by two brothers for more than 50 years. They kept it a secret, however, as their heirs did not learn of the property's existence until the two brothers passed away within 11 days of each other in 2014. As successor trustees under the brothers' trusts, the heirs chose to sell the property, which included the theatre and three commercial retail spaces. The family of one of the brothers engaged Tonkon Torp for the transaction, with attorney David Petersen
in the lead. David chairs Tonkon Torp's Real Estate & Land Use practice group
The sale included a number of unforeseen plot points. The most pressing was that the brothers had kept almost no records whatsoever regarding the properties, so the successor trustees had an exceedingly poor paperwork trail to follow. With the help of Tonkon Torp and other professional advisors, the heirs were able to reconstruct some of the property's history so as to provide appropriate disclosure and background to the buyer.
Another unique plot point was that the building sat across two lots. In addition to the theater complex, the building extended onto a neighboring lot which the brothers did not own, but rather leased under an 80-year lease at a rent that had not gone up since 1946. While the leased parcel would have tremendous value to its owners once the lease expired in 2026, for the time being it was practically worthless to them. After protracted negotiations, the heirs were able to purchase the leased ground and include it in the parcel offered to the new buyer.
Property taxes posed a further complication. Upon the death of the two brothers, the property was reassessed under California's Proposition 13. Because the brothers had owned the property for so long, this resulted in an over ten-fold increase in assessed value. Tonkon Torp assisted its client to manage the pass-through of the significant increase in taxes to the property's tenants and the City of Coronado, which had assumed some tax responsibility through a redevelopment agreement with the theater tenant. This included participation in a tax appeal by the City.
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