18 November 2009

Apartment Complex In Foreclosure


The Belmont at Cowan Place apartment complex on Cowan Boulevard in Fredericksburg could be heading to foreclosure, but residents there shouldn't be affected.

A public foreclosure auction on the 300-unit, 21.7-acre property is scheduled for 1:30 p.m. Dec. 4 in front of Fredericksburg Circuit Court. Legal classified ads for the event have been running this week in The Free Lance-Star.

Stellar Belmont LLC bought the apartment complex for $35 million in August 2004, according to city property records. Its tax assessed value is now $30.9 million.

The property is managed by Stellar Realty Management, a division of Rockville, Md.-based Stellar Advisors. That company, which includes numerous different investment partnerships, owns complexes in Virginia, Maryland, Florida and Texas apartments.

This semester, the Belmont apartment complex has been housing dozens of University of Mary Washington students who weren't able to live on campus due to space constraints brought on by UMW President Judy Hample ending the practice of allowing three freshmen to a single dorm room.

Foreclosure auctions are often delayed at the last minute. Even if the Belmont complex goes to foreclosure, residents there won't be affected initially, said Phillip Pitney, chief operating officer at Stellar Realty Management.

"It should be invisible to residents," he said.

A manager at Belmont said she didn't know anything about the possible foreclosure auction.

The financing for the 2004 Belmont purchase was done through a real estate mortgage investment conduit (REMIC) loan originated by now-bankrupt Lehman Brothers. It was then securitized, placed into a commercial mortgage-backed security with other loans and sold to investors. That was a common form of commercial lending during the boom.

Thus far during this recession, there have been just a handful of commercial foreclosures in the Fredericksburg area. But some worry that pace could accelerate over the next few years due to higher vacancy rates, lower rents and difficulty with refinancings.

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