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Vestcor Asks for Help
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Vestcor Properties is a group that owns many apartment communities in Jacksonville including two up-scale apartment buildings downtown, 11 East Forsyth and The Carling. Their properties are just some of the many residential communities downtown thought to bring people back into the city. But occupancy rates have fallen 80 percent and Vestcor now wants Jacksonville to waive principal payments on their loans for three years and offer funds for commercial build-outs to attract tenants.
Vestcor’s problem is their inability to attract and retain tenants, something that has been plaguing the Jacksonville area this year. Jacksonville, according to real estate research company Reis Inc., finished 2009 with the highest vacancy rates of the 79 U.S. markets that it follows – 14.4 percent. Other developers have been requesting modifications for their failing properties and the banks have willingly complied for fear of an abundant of apartment foreclosures around the city. Steve Moore, Vestcor’s chief financial officer, says the company also had other apartments with difficulties, and the banks readily modified those loans.
Vestcor was lent $17.8 million at 1.5 percent and $16.5 million at 1.4 percent from the city to finance the buildings. Vestcor also put an additional $3.6 million into the properties to keep them afloat. City officials are now trying to protect the city's investment. Granting the request will postpone principal payments and allow time for the real estate market to recover, but denying the request will result in defaulting on the loans.
Officials should consult with local bankers on the approaches they are taking with similar requests and find ways to entice retail and entertainment businesses downtown. Whatever decision is made will be a prelude to the rise or demise of Jacksonville's residential developments downtown.
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