FRISCO, TX-A press release issued by Behringer Harvard announced that Chief Judge Brenda T. Rhoades of the US Bankruptcy Court for the Eastern District of Texas confirmed the Plan of Reorganization filed by Behringer Harvard Frisco Square LP, et al, which, upon Rhoades’s order, will allow the property to emerge from Chapter 11 bankruptcy soon.
The Addison, TX-based Behringer Harvard had Chapter 11 bankruptcy on Frisco Square last June after being unable to restructure its debt with Bank of America NA, the property’s lender. Frisco Square, located at the intersection of Dallas North Tollway and Main Street, is a 147-acre, mixed use development that contains five office, retail and residential buildings totaling 103,000 square feet of office space, as well as 114 multifamily units and 65,000 square feet of retail space. According to media reports, during early 2012, the entity defaulted on the $44.1 million in loans it took out for its Frisco Square investment.
Behringer Harvard Frisco Square LP is the special-purpose entity that holds the company’s interests in Frisco Square, which is the town center for the City of Frisco and home of its city hall, library and heritage center. Behringer Harvard’s interests at Frisco Square include six tracts that are held by indirect subsidiaries of Behringer Harvard Opportunity REIT I Inc.
Behringer Harvard Opportunity REIT I invested in Frisco Square in August 2007, and holds interests in a 48-acre portion that includes the following existing assets: three office/retail buildings with 103,120 square feet of rentable office space and 29,405 square feet of retail space; two multifamily/retail buildings with 114 high-end multifamily units and 39,526 square feet of retail space; and one 12-screen Cinemark theatre with approximately 41,464 square feet of retail space.
The 48-acre portion of Frisco Square also includes entitlements for a total of 1.76 million square feet of office space, 438,000 square feet of retail, restaurant, and entertainment space, 760 multifamily units, 200,000 square feet of hospital/medical office space and 200 hotel rooms.
The Plan of Reorganization was unanimously approved by both the creditors and equity holders and provides for payments in full to all creditors. Bank of America and Regions Bank, the lenders for the project, agreed to extend their loans for a period of five years with a two-year extension option, in exchange for an aggregate $16.5 million in payments on the outstanding loan balance.
The press release points out that Behringer Harvard Opportunity REIT I is making a significant financial commitment to the Frisco Square project by investing approximately $20 million in additional equity, including the $16.5 million payment on the loans. As a result, Behringer Harvard Opportunity REIT I will own 100 percent interest in the property.
“We continue to believe in the strong potential of our holdings at Frisco Square. We’re pleased that this reorganization will provide us with the time and flexibility necessary to complete our value-creation strategies for this exceptional property,” says Michael O’Hanlon, president and CEO of Behringer Harvard Opportunity REIT I in a press release. “We wish to thank George Purefoy, the city Manager of Frisco, and his staff, as well as the City Council of Frisco and Richard Abernathy, the City of Frisco’s counsel, for the important roles they played in bringing this challenging process to a successful conclusion. We look forward to continuing to work with the City of Frisco to further the growth and success of Frisco Square over the next several years.”