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Despite financial problems, Boardwalk still open for business

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Written by : Bobbie J. Clark 


Joseph Filippazzo hasn’t lost any sleep over the future of the Louisiana Boardwalk.

In fact, he’s confident that it will continue to be one of the premiere shopping destinations in Louisiana, despite the property falling into foreclosure and being sold at a Bossier Parish sheriff’s sale last week.

Filippazzo and his family are the owners of Pietro’s Neighborhood Pizzeria and Italian Kitchen, which has called the Boardwalk home for a little more than a year.

The Boardwalk location is the family-owned restaurant’s second. The original is in Longview, Texas, where Filippazzo’s father started the business 33 years ago.

“This is actually pretty common in commercial real estate,” Filippazzo said. “Last year, General Growth went bankrupt and none of their malls shut down.”

General Growth Properties filed for Chapter 11 bankruptcy in 2009, which was the largest real estate bankruptcy in U.S. history, but still kept many of its properties open for business, including Pierre Bossier Mall and Mall St. Vincent.

Despite his optimism, Filippazzo admitted the press surrounding the Boardwalk’s recent financial problems has affected sales.

He said many people in Longview, Texas, have asked him if the Boardwalk was closing.

The Boardwalk’s Facebook page even contained several posts from people wanting to know if it was closing.

“This place is open, and it’s cranking,” Filippazzo said. “We are excited for what the future holds.”

That future could go one of two ways, according to Manus Clancy, managing director of Trepp, a commercial mortgage analytics firm based in New York City.

The trust can keep the property and manage it through the current management company, Bayer Properties, or they can sell it.

Clancy said selling it now is not as bad an option as it was a couple years ago when the country was mired in a recession.

“Now you’re starting to see lenders lend again,” he said. “They can also go to insurance companies and securitize these loans. It really comes down to price at this point.”

As long as the trust seeks a reasonable offer, then there should be a developer willing to buy it, he said.

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“From what I’ve heard, it’s a trophy property that’s well-regarded and desirable,” he said. “The problem was they put too much debt on it from day one. They weren’t making enough money to cover their debt service.”

The Boardwalk also suffered from inflated appraisals and liberal lending practices that were commonplace in the years leading up to the recession, Clancy said.

Once the property was completed in 2005, it was appraised at $162 million. It sold for less than half that last week.

O&S Holdings, the company that held the property before defaulting on its mortgage, had financed its purchase of the Boardwalk with an interest-only loan. For the first few years, O&S was able to afford its monthly payments because they were only paying interest. Once the debt-service changed to principle and interest in September 2008, O&S started having trouble making payments.

“The property can only handle about $100 million of debt,” Clancy said. “At the right price, it could be profitable deal for a developer.”

Regardless of who ends up controlling the Boardwalk, the future of the property depends on the ability of the developer to effectively attract the right mix of tenants, according to Raymond Alley, a partner at Walker-Alley & Associates, a commercial real estate firm based in Shreveport.

“They need to go out and seek higher quality retailers,” Alley said. “They need to get aggressive and start pounding down doors and making some enticing deals to bring people in.”


Written by demon53

April 18, 2011 at 2:12 pm

Posted in Uncategorized

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