Tonkon Torp Stays the Course in the Mississippi Avenue Loft Project
In April 2016, Tonkon Torp concluded a complex, six-year real estate transaction for longtime client Jim Winkler. The process to acquire, complete, and sell the Mississippi Avenue Lofts project involved a broad range of legal transactions, including a funding round, multi-party loan and purchasing agreements, litigation, and a final sale.
Mississippi Avenue Lofts is a mixed use project with high-end residential units and retail space that launched in 2007. In late 2008, the original developer deeded the property to his two lenders, Albina Community Bank and ShoreBank Pacific, in lieu of foreclosure. Tonkon Torp entered the picture in April of 2010 when its client sought to purchase Mississippi Avenue Lofts from the two banks.
attorney David Forman
completed securities work for a rapid round of funding, which raised $3 million in one month from a small group of investors procured by Jim Winkler who became members of MAL 2010, LLC. Joe Voboril
, the lead Real Estate
attorney for the transaction, then drafted the purchase agreement and facilitated a loan from ShoreBank Pacific that allowed MAL 2010, LLC to buy the Mississippi Avenue Lofts project for $6.7 million. The purchase was at a significant discount; the two banks had advanced slightly more than $13 million to the developer to construct the project and to correct defects that had occurred during construction.
As the project neared completion, an additional capital call from the investor group was required to correct more defects that were uncovered. Upon opening, the Loft’s 32 units and commercial spaces were all leased within a month.
Tonkon Torp then engaged in litigation with the project architect, the insurance company for the bankrupt general contractor, and 14 other subcontractors and consultants, and their respective insurers. Following 13 months of litigation, handled by Ned Perry
and Chris Pallanch
, a settlement was reached in April 2012 which allowed MAL 2010, LLC to repay the investors for the additional capital call, pay the firm's legal fees, with additional funds set aside to address any subsequent problems.
MAL 2010, LLC chose to sell the Lofts when an unsolicited purchase offer was received in early 2016. Tonkon Torp facilitated the sale for $14 million, which closed in April of 2016. After paying off its loan balance and all closing costs, MAL 2010, LLC received net proceeds that tripled its initial $3 million investment.
The Mississippi Avenue Lofts project is a prime example of Tonkon Torp’s ability to bring together a multi-disciplinary team to address the broad variety of legal issues that often arise in a complex real estate transaction.
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