The Mosaic Building apartments in downtown Dallas is facing foreclosure. At least one of the building’s lenders has filed foreclosure on a $63 million loan. Businesses and residents leasing in the building will not be impacted by the foreclosure. Hamilton Properties which owns Mosaic said that it has no plans to lay off employees and there are no rumors of a future bankruptcy. The company is facing foreclosure after making interest only payments for the first three years of Mosaic’s mortgage and then being hit with an adjusted mortgage payment of $80,000 extra per month. Unfortunately, the commercial real estate company was unable to meet their payment obligations and unable to work out something with the lender that would have avoided a foreclosure filing. But there may have been other problems that led to the foreclosure filing:
•Occupancy. The Mosaic reached 75 percent occupancy in January 2009, but it could never get beyond that, even though the company lowered its rental rates, Hamilton said. Rents today range from $1,100 to about $6,000. The average apartment is 1,250 square feet.
•Competition. “Our timing was not great in opening,” Hamilton said. “We opened just as a bunch of other new luxury products opened downtown. It’s really a supply issue. The whole downtown residential market is struggling.”
With low occupancy rates and a sagging economy, a foreclosure for the Mosaic was almost inevitable. Plus, many analysts see the luxury real estate market as saturated and a low priority for consumers who are faced with job losses and other crises which are threatening their financial well being.