Court Receiver Takes Control of Page Mill Properties

By Sharon Simonson
A San Mateo County Superior Court has appointed a Pacific Palisades real estate company to act as receiver in the management of 1,800 apartments in East Palo Alto owned by Page Mill Properties of Palo Alto and CalPERS.Wald Realty Advisors, which lists multiple receivership assignments and other capabilities on its Web site, was appointed following a court filing Sept. 8 by Wachovia Bank asking the court to remove Page Mill. The complaint states that Page Mill failed to make a $50 million principal payment on an outstanding loan of $243 million by Aug. 4, when it became due. The complaint further states that Page Mill failed to make a monthly interest payment due Aug. 9 related to the same loan.

The complaint also alleges that Page Mill failed to forward August rents to Wachovia, as stipulated in the loan documents. The bank, now owned by Wells Fargo & Co., asks the court to issue a temporary restraining order to prevent the rents from being spent on anything else and to direct Page Mill to preserve all financial records related to the rental units and not to interfere with the receiver.

It was not clear from the court record whether the restraining order had been issued, and attorneys for the bank did not return calls. A spokesman for Page Mill said he had no comment.

Dave Wald, founder and principal of Wald Advisors, declined comment. Tony Theophilos, a San Francisco real estate attorney who has acted as a receiver, said it is common for receivers to appoint a new property management company upon their appointment. The East Palo Alto rental units have been managed by a company affiliated with Page Mill.

Receivers are agents of the court. They are appointed to manage buildings and sometimes even entire businesses in cases where there are legal disputes or loan defaults to ensure the properties are properly maintained. Receivership is not tantamount to foreclosure, though property owners often lose their holdings permanently after a receiver is put in place.

Wachovia has not filed a notice of loan default in San Mateo County, the first step in what is called non-judicial foreclosure, and nothing in the court filing by Wachovia suggests that Page Mill has lost ownership of the properties.

The California Public Employees’ Retirement System invested $100 million in the East Palo Alto venture but has written down the value to $60 million, according to public records.

West Coast Commercial Real Estate News