DELINQUENT DEBT: WEST OAKS MALL SALE! Here’s another chance to clean up some of the wreckage left by mysterious investor Edward Okun: “West Oaks Mall in Houston . . . has $81.3 million in delinquent debt attached to it in the form of commercial mortgage-backed securities. Joseph Luzinski, the federally appointed bankruptcy trustee for West Oaks Mall, said he hopes to sell the mall by year’s end, though store closures continue to hamper its value. [The mall] . . . is about 80% occupied, having lost a J.C. Penney, Linens ‘n Things and Whitehall Jewelers. The mall recently cut a deal to keep its Steve & Barry’s LLC store open amid that retailer’s bankruptcy. The special servicer for the mall’s debt, LNR Partners Inc., attempted to foreclose in September 2007, but Mr. Okun forestalled the move by putting the mall into Chapter 11 bankruptcy protection the next month. A federal grand jury indicted Mr. Okun on fraud charges last March after his 1031 Tax Group LLP, a company that helped facilitate tax-free real-estate deals for small investors, collapsed into bankruptcy and didn’t return $132 million of investors’ money.” [Wall St. Journal; previously]
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Noting that the site is “relatively maintained and free of vandalism and graffiti,” Robert Kimberly reports back from his recent pilgrimage to Ashford Point Dr., where he got the apparently-still-empty Chong Hua Sheng Mu Holy Palace to smile for the camera.
A few more highlights from the photo session, below:
One highlight of David Beebe and John Nova Lomax’s Richmond Ave. walking tour mentioned here last week was Lomax’s description of this strange vision on the #25 bus route to Mission Bend:
Towards the end of the line, the bus turned left off Richmond and into a weird suburban residential neighborhood. Ashford Point, the street we were on, was bisected by a greenspace in which there was a sunken trail, which ducked under the streets in little tunnels.
And then there was… this thing, this sprawling empty complex, this five-story square building topped by a 40-foot golden geodesic dome, flanked by two smaller domes. Two exterior staircases flanked these orbs – the overall effect was something like a sawed-off Mayan temple of the sun.
The whole compound was ringed by an iron fence, and then there was another huge fence around the entry to the building. The vast parking lot was empty, and there were no signs nor apparently even a mailbox. It was completely surreal. Neither Beebe nor I had a clue what it was – Beebe thought it might be the private residence of a very weird Arab sheik. I thought at first that it might be a mosque, but it didn’t look much like one closer up.
After the jump: What was it?
Pedestrian scribe John Lomax and Marfa City Council candidate David Beebe have, by this time, earned the right to make a few sweeping statements about various Houston neighborhoods. And Lomax exercises that right in his chronicle of the pair’s latest adventure on foot, along Richmond Avenue from Mission Bend to Midtown:
. . . the epicenter of H-Town cheese is the corner of Fountainview and Richmond. A four-story, day-glo, red, white, turquoise, and tan building looms over the southeastern corner there, and it houses a Sprint shop, a little downstairs bar with the godawful name Identity, a scalper’s office, a massage therapist, and a huge Darque Tan outlet.
Sure, Westheimer’s got some cheese, and is a little tattered around the edges in spots, but there’s a veneer of gentility as expressed by old-line businesses like Christie’s Seafood. Richmond, by contrast, used to have that sub-Landry’s fried seafood emporium King Fish Market, which despite the incessant awful commercials that polluted local airwaves circa 1999, is now out of business and practically in ruins. The whole lot of it is a great vat of rancid Velveeta.
As is much of the Richmond Strip. That giant sax outside of Billy Blues is looking more and more like the torch sticking out of the sand at the end of Planet of the Apes.
After the jump: how’s the nightlife?
[youtube:http://youtube.com/watch?v=2O53kp1Te2M 400 330]
Are you an architectural renderer struggling to bring life to yet another vast Houston shopping-center parking lot in the drawings developers have commissioned you to create? This video should bring you inspiration! Go ahead and draw in that parade — that street festival — that touching moment of parking-lot excitement. You won’t be faking anything!
Today’s baton-twirling parking-lot-parade marshal was photographed by Jason of the Around Town Houston blog — as he waited in the drive-thru at Burger King on Westheimer, just east of Highway 6, just around the corner from the West Oaks Mall.
Practice makes perfect!
- Dude Twirling [YouTube]
- He’s Back [Around Town Houston]
- Homeless Twirler??? [Around Town Houston]
- Heights Village: Parking Lots Are the New Main Street! [Swamplot]
An update on the 1031-exchange debacle surrounding the West Oaks Mall: In March, the mysterious Edward Okun — the mall’s owner — was indicted by a Virginia grand jury on charges of mail fraud, for misappropriating $132 million invested in his 1031 exchange company, 1031 Tax Group — along with bulk cash smuggling and related charges. Days later, Okun was arrested in his home on Hibiscus Island in Miami Beach.
To the 340 investors who had trusted $150 million of their 1031-exchange funds to supposedly-qualified intermediaries controlled by Okun, this was good news. But it doesn’t necessarily mean they’ll get their money back — or find a way around the huge tax liability now associated with their failed exchanges.
The 1031-exchange investors in Okun’s 1031 Tax Group had hoped to recoup some of their missing funds by raiding Okun’s other assets — including the West Oaks Mall. But the Okun-controlled companies that owned the mall declared Chapter 11 bankruptcy in October.
Today, the Costar Group reports that the freestanding building formerly known as JCPenney at the West Oaks Mall has been put up for sale, along with a mall in Salina, Kansas. The trustee in the bankruptcy case has hired Keen Realty, the new real estate division of KPMG Corporate Finance, to market both properties.
- Okun Assets Go on the Market [CoStar Group]
- Case History Prior to the Appointment of the Trustee [The 1031 Tax Group Bankruptcy Trustee]
- West Oaks Mall: Your Exchanges Are No Good Here [Swamplot]
So much excitement at the West Oaks Mall! Don’t worry, it likely won’t be foreclosed on—because the owners of the super-regional mall at Westheimer and Highway 6 have now declared bankruptcy. This is bad news for about 340 investors who were hoping to recoup 1031-exchange funds that went missing in the middle of their transactions. They’ll likely lose more than $150 million dollars . . . and possibly be required to pay taxes on the gains they made (and were hoping to shield with the 1031 exchange) . . . before they lost them.
Their money was to be held in escrow accounts for when they came back to conclude the back-end purchase of their tax-free exchange. When that time came, the money was gone.
Now, one of the largest of those assets that creditors had hoped could be used to recoup some of their money is untouchable.
IPofA West Oaks Mall LP, IPofA West Oaks LeaseCo LP and IPofA WOM Master LeaseCo LP (collectively, the “West Oaks Debtors”), filed voluntary petitions under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division, last week.
The West Oaks Debtors are directly and/or indirectly owned and/or controlled by Edward H. Okun, a controversial investor who also controls several 1031 qualified intermediaries under the umbrella firm of The 1031 Tax Group LLC that are also currently tied up in bankruptcy proceedings.
Shopping’s still good, though!
1031 exchange investors: watch where your money goes.
- Mall Bankruptcy Complicates 1031 Investors’ Problems [CoStar Group]
Photo: West Oaks Mall
