I wonder if Thomas Enterprises will sort this out before then? Not likely.
Railyards set for Friday auction
by Suzanne Hurt, published on October 19, 2010 at 7:18PM
http://www.sacramentopress.com/headl...Friday_auction
Sacramento has probably never seen a foreclosure auction like the one that may take place here Friday.
The 203-acre Railyards property is scheduled to be sold for cash on the spot to the highest bidder on the Sacramento County courthouse steps at 1:30 p.m. Friday.
Poised for the auction block: Most of the historic former Southern Pacific railyards, where railroad shops more than a century old mark one end of the first transcontinental railroad. Adjacent to downtown, the site's been approved for a $6 billion mixed-use project reported to be the country's largest infill development.
Current plans call for a regional transportation center to be built there, along with housing, office, retail and open space. Other developers are working on a proposal to build a new Sacramento Kings arena on city-owned property between the Railyards site and the downtown train station.
Georgia developer Thomas Enterprises defaulted on its loans for the property in June. Its lender, Inland American Real Estate Trust of suburban Chicago, scheduled the auction last month.
The two sides may still negotiate a new agreement on what are now nearly $194 million in loans before the auction takes place.
"A lot of this could be just smoke and mirrors. They're probably scrambling right now," said Robert Storment, president of the California State Auctioneers Association.
It's also possible, even likely, the auction will be postponed by the seller, as late as the morning of the auction. Once an auction is scheduled, it can be postponed repeatedly for up to a year after the initial date.
A courthouse sale of such a property would be unusual anywhere in the country. What makes this stand out is that the property once housed railyards and is a big chunk of land right next to a major city's downtown core, said Hannes Combest, chief executive officer of the National Auctioneers Association, based in Kansas.
"That is very unique," she said. "You don't find 203 acres within a city that are available for development."
The sale could throw a spotlight on the hidden world of foreclosure auctions.
Every weekday, a group gathers just outside the doors to the Gordon D. Schaber Sacramento County Courthouse, where hundreds of thousands – sometimes millions – of dollars’ worth of foreclosed property is auctioned off.
Auctioneers usually set up at green metal tables off to the side of the courthouse entrance. Throughout the day, they "cry" or announce the properties for sale and the auctions that have been postponed.
"This sale is made without express or warranty...." one auctioneer began on a recent morning. "How much am I offered and by whom? Do I hear a higher bid?"
Auctioneers must call out the entire process whether anyone is bidding or not. Most sales involve houses. Thousands of homes are sold in foreclosure auctions every day in this country.
Only a very small percentage of properties are bought outside Sacramento's courthouse, the auctioneer said.
The majority of people who enter the courthouse take no notice of the tiny, often quiet group of men in military-short haircuts, T-shirts and jeans. Some buyers represent themselves. Others earn commissions representing investors.
Fortunes can be made and lost there on real estate deals gone bad. Buyers are known for being cut-throat competitive. Eyes hidden behind dark sunglasses, many are unfriendly to outsiders who don’t operate in their small daily sphere.
"There's no love down here," an auctioneer said.
Currently, Stewart Default Services and a company called Priority Posting have assigned the sale of the Railyards property to an experienced auctioneer. The property reverts back to the bank if it's not sold at auction.
Thomas may be trying to negotiate to repay significantly less than what they currently owe because the land is no longer worth that much in 2010. The auction was still scheduled as of late Tuesday afternoon.
Usually, a property like the Railyards would be auctioned in a very different way. Such property is usually marketed worldwide. "Due diligence" packages with 100 to 200 pages of information would lay out the property's pros and cons for buyers. Preview time would be arranged. The sale would usually take place on site at the Railyards or a nearby hotel conference room.
However, it's still possible large groups of buyers could turn up at the courthouse Friday. In that case, principal investors would be likely to attend to handle the bidding themselves. But they could send representatives who'd communicate via cell phones and post bids as requested. Cash must be paid on the spot and could be in the form of cashier’s checks.
Many courthouse foreclosure auctions are held so the bank can get clear title to the property. The lender may send a representative to keep bidding until they are the high bidder or they get the price they want.
"They don't expect anyone to show up," said Tommy Williams, a nationally recognized auctioneer who co-founded Williams & Williams of Tulsa, Oklahoma. "It's nothing more than a legal formality to get this into the hands of the mortgage company."
Storment agreed. Still, stranger things have happened at foreclosure auctions, he said.
"I have seen someone come out of the blue – maybe there's a group that thinks it's worth 500 million. Maybe they think 500 million is a steal," he said. "But I wouldn't make that bet."