Ft. Lauderdale's Corporate Center Facing Cash Crunch
The slow economic recovery is taking a toll on an affiliate of Cabot Investment Properties, which has been unable to pay brokers’ commissions or return a security deposit to a former tenant of its office building in downtown Fort Lauderdale.
The 24-story office tower is mired in debt and its lender won’t let Cabot’s affiliate, Cabot East Broward, write checks on its account, the sources said.
Cabot East, the affiliate of the New York-based real estate investment manager and adviser group, has a $40 million mortgage on the 346,000-square-foot building. LaSalle Bank N.A., as trustee, owns the debt, according to Broward County property records. Cabot chief operating officer Timothy Kroll said he was not aware of any unpaid commissions or security deposit but was trying to get that information from the lender.
Kroll said his company is trying to reach a solution with its lender to turn the building around.
“We are currently working with the lender on the restructuring of the mortgage and recapitalizing the property,” he said. “I expect that anything that is unpaid to be satisfied in the next four to six weeks.”
He said the capital injection would also help fund the leasing reserves required to pay the costs of signing new leases, like providing tenant improvement allowances. “We are very optimistic we are going to have everything in good condition pretty shortly,” he said.
Corporate Center saw its income plummet during the recession when its vacancy rate swelled to more than 25 percent and its rental rates dropped from about $29 per square foot to about $25 per square foot, according to a broker familiar with the building.
“It has been very challenging,” Kroll said. “Our rates have been falling and other buildings have been approaching our tenants.” Yet, he said his building, now 75 percent occupied, is doing better than many other office towers on Broward Boulevard. “Some of the other buildings are well below that.”
Cabot owes Casino Austria Maritime close to $12,000 for a security deposit that it was due to be returned six months ago when the tenant moved out, said a broker familiar with the property.
Michele Klempner, operations manager at Casinos Austria, declined to comment for this story. “We are not at liberty to discuss that because it is in litigation,” she said but declined to say whether a lawsuit has been filed or a demand letter sent to Cabot East. A search of federal and Broward Circuit Court records turned up no litigation involving Cabot and Casino Austria.
Another broker said Cabot owes large commissions to a number of brokers. The source said Cabot owes close to $500,000 to CBRE, which managed the building and handled the leasing until last year. CBRE spokeswoman Elizabeth Cross declined to comment. “Due to confidentiality, we are not in a position to comment at this time,” she said.
Grubb & Ellis Co. broker Robert McCullough is now handling leasing for Corporate Center on behalf of Cabot.
Cabot East Broward is also facing a $103,381 judgment that a contractor won against it in February. Decon Environmental & Engineering obtained the judgment by default, after Cabot did not to respond to the complaint. In 2010, Decon provided water and mold remediation after the building experienced a leak, said its attorney Harry Malka, a partner with Malka & Kravitz in Fort Lauderdale. Malka said on Tuesday that Cabot has yet to pay up.
Cabot East Broward also has three warrants against it from the Florida Department of Revenue for failing to pay nearly $498,000 in sales and use taxes, according to the Broward Clerk of Courts.
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