First Capital Real Estate Trust Receives Notice of Default on $20 Million Loan
First Capital Real Estate Trust Incorporated, a publicly registered non-traded REIT, has received a notice of default and election to sell under deed of trust from Mortgage Lender Services Inc, according to a filing with the Securities and Exchange Commission.
The notice of default relates to a $20 million loan made by Copia Lending, formerly ISIS Lending LLC, that was secured by 23 parcels of land located in Sacramento, California. According to the lender, the total amount owed is approximately $42 million, and includes the unpaid principal balance, plus accrued interest, late charges, advances, attorneys’ fees, foreclosure fees and delinquent property taxes.
The loan matured on December 31, 2015, and the First Capital and Copia have been engaged in negotiations to extend the loan since the company acquired the properties.
Copia is electing to conduct a unified foreclosure sale of the properties, but cannot set a sale date until early May. In the meantime, First Capital REIT is seeking to reach a resolution so that a foreclosure does not occur, the filing stated.
Late last year, First Capital Real Estate Trust entered into an agreement with Presidential Realty Corporation (OTC: PDNLA/PDNLB) and its newly formed operating partnership where Presidential will assume 66 percent of the liabilities with respect to the loan on or before March 16, 2017. The REIT is currently consulting with Presidential and other potential sources of funding to address the notice of default.
First Capital Real Estate Trust was formerly known as United Realty Trust Inc., a non-traded REIT founded by controversial New York real estate developer Jacob Frydman. Singal, the founding principal of Sacramento-based First Capital Real Estate Investments, took control of the REIT in 2015.
First Capital Real Estate Trust has not filed any quarterly or year-end financials with the SEC since August 2015, and suspended its monthly distributions to investors in November 2016 to increase its cash reserves. The REIT also engaged Ladenburg Thalmann Financial Services as advisor to review strategic alternatives available to the firm, with the goal of maximizing liquidity and long term shareholder value.
First Capital’s portfolio consists of 27 assets including land development, multifamily development, a gas station, hotels, medical offices, transitional housing, and business offices.
