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HomeMy WebLinkAboutG-7 - Approval of Fidelity Mortgage Investors as a Secured Lender on Balboa Bay Club Leasehold PropertyFEB 1u 1973 By the CITY COUNCIL CITY 0-0 two""" i.k"CH CITY OF NEWPORT BEACH Office of CITY ATTORNEY To: The Honorable Mayor and Members of the City Council From: City Attorney February 12, 1973 Subject: Approval of Fidelity Mortgage Investors as a Secured Lender on Balboa Bay Club Leasehold Property On December 15, 1971, the City Council consented to the assign- ment of the Balboa Bay Club's lease and improvements located on the leased property to U. S. Financial Corporation as secu- rity for refinancing the Club for the purpose of paying off existing debts and to expand the Club facilities. The terms of the Consent Document approved U. S. Financial Corporation or an affiliate or subsidiary thereof as lender, or "such other corporation, persons or entities as may be subsequently specifically approved by the City of Newport Beach." Pursuant to that Consent Document, a portion of the Balboa Bay Club lease was assigned to U. S. Financial to secure a loan of $6,650,000.00. As part of that original refinancing arrange - ment,.the Balboa Bay Club now wishes to assign the remaining portion of their leasehold estate to Fidelity Mortgate Inves- tors as security for an additional loan of $4,594,000.00. Because Fidelity Mortgage Investors is not an affiliate or subsidiary of U. S. Financial, prior approval of the City Council is required pursuant to terms of the original Consent Document. I have prepared an appropriate resolution which if adopted would provide the necessary City approval of Fidelity Mortgage Inves- tors as a secured lender on the Balboa Bay Club leasehold property. DENNIS O'NEIL City Attorney DON dm cc: City Manager City Clerk G 7. u LAW OFFICES OKEEI'E,RECHT & GRIEPP / //� - INCORPORATED / ° �7 4a 1 THOMAS J. O'KEEFE ORVILLE F. RECHT WINSTON P.GRIEPP FEB 1 Z 1973 By .he CITY COUNCIL February 6, 1973 CITY 00 "Pwo'w! 2604" Dennis D. O'Neil, Esq., City Attorney City of Newport. Beach 3300 West Newport Boulevard Newport Beach, California 926.60 SUITE 400; 2323 NORTH BROADWAY SANTA ANA, CALIFORNIA 92706 TELEPHONE [714 836 -19 I Re: Approval of Fidelity Mortgage Investors as a Secured Lender on Balboa Bay Club Property Dear Mr. O'Neil: rye. 77 >' rn �... .. ;� P:. FEB G 1973® ra n In December of 1971 the City by resolution and consent to assignment, approved the sale or hypothecation of the Balboa Bay Club's leasehold estate through deed of trust and /or sale - leaseback in transactions not to exceed an aggregate total of $13,200,000. The consent to assignment, a copy of which is enclosed, approved U. S. Financial Corporation or an affiliate or subsidiary thereof as lender, or "such other corporation, persons or entities as may be subsequently specifically approved by the City of Newport Beach." As you will recall, pursuant to that consent an interim wrap- around loan in the amount of $6,650,000 was made on the Terrace Apartments portion of the Bay Club property. I have enclosed herewith a copy of a letter dated March 2, 1972 from Mr. R. S. Walter of U.S. Financial to you more fully describing that transaction. Now, as a subsequent step in the program of refinancing, the Bay Club intends to obtain an interim wrap - around mortgage loan on the other portion of the Bay Club property, i.e., the portion which is subject to the first deed of trust in favor of Great Western Savings. This loan is in the amount of $4,594,00.0.. Of this $2,145,000 will be reserved to cover the underlying debt to Great Western -Savings & Loan and of the balance, a portion of the proceeds will be used to serve as construction financing for the Guest House addition which has been thus far financed out of the Bay Club's own working capital reserves. W • Dennis D. O'Neil,. Esq. February 6, 1973 Page Two As you will note, the combined total of the wrap - around mortgages to U.S.F. Investors and Fidelity Mortgage Investors, including the underlying debt to Union Bank and Great Western Savings & Loan Association, respectively, totals $11,244,000: This.is still well within the $13,20.0,.000 anticipated by the City's original consent authority. As I mentioned, these are both interim steps and will be later replaced with more permanent financing through new loan and /or sale - leaseback transactions. I have enclosed for your review and information a copy of the Fidelity Mortgage Investors mortgage loan commitment for Loan No. 73 -549. The proposed lender, Fidelity Mortgage Investors, is a real estate investment trust which is publicly held and traded on both the New York and Pacific Coast Stock Exchanges. As you know, both the Securities and Exchange Commission and the New York Stock Exchange review the character and reputation of the officers and directors of.publicly held companies so listed. Should you desire any additional information, please let me know and I will furnish it to you. All of the requirements and conditions contained in the original consent will, of course, again be complied with and I will furnish you with copies of all the final loan documents. I will plan to attend the Council Meeting of February 12th to answer any questions which the Council may have concerning this matter, should the consent of the City Council be necessary.. Very truly yours, O'Keefe, Recht & Griepp, Incorporated i -04" CKe fe Y TOK:jm . Enclosures rvv -F–_C11T & GI:IEPP, 111COTT,,6,,1-- "rc- :cite 400 — - ----- 13705 2323 )W '_ PEco!zocn AT RCCUE". r FIRST C.1 TITLE C, Santa Callfor:ila 92706 Telephone: (714) $35-1100 IN ORANGE W`77. U�Llr. $JI2 //0,4Nj 16 J/2 CONSENT TO ASSIGNMENT Or LEASEHOLD ESTATE BY DEEDS OF TRUST AND/OR BY SALE LEASE -SACZ Reference is hereby made to that certain lease dated March 24, 1948, as amended April 10, 1950, September 29, 1952,, and March 28, 1960, wherein the CITY OF NEWPORT BEACH, a munic- ipal corporation, is the lessor (the "LESSOR"), and BALBOA BAY CLUB* INC,, a California corporation, is the lessee (the "LESSEE") covering and affbcting certain real property situated in the City of Newport Beach, County of Orange, State of Cali= fornia, which property is more particularly described in said lease, as amended (said lease, as amended,,is hereinafter re- On ferred to as the "Main Lease"). BALBOA BAY CLUB, INC. proposes to sell or hypothecate the leasehold estate created by the main Lease by deeds of trust and/or sale lease-back (hereinafter referred to as "financing documents"). The financing documents are further described as follows: said conveyances shall be for an amount not to exceed Thirteen Million Two Hundred Thousand Dollars ($13,200,000.00) and shall • be made by BALBOA BAY CLUB, INC. as Grantor to U. S. Financial Corporation or to an affiliate or subsidiary thereof or to such other corpora- tion, persons or entities as may be subsequently specifically approved by the CITY OF NEWPORT B L ACII. The deeds of trust shall be given by BALBOA BAY CLUB, INC.; a California corporation, as Truster in favor of U. S. Financial Corpora- tion or a subsidiary or affiliate thereof or such other corporation, persons or entities as may be subsequently approved by the CITY OF N5•,'PORT ►1UNUl"` 4U.. BEACH as security for payment of an indebtedness not to exceed the said sum of Thirteen Million Two Hundred Thousand Dollars ($13,200,000.00). The CITY OF NEWPORT BEACH, as Lessor, hereby consents to the financing documents and transactions described hereinabove upon the condition that the same is given and accepted subject to the following covenants and conditions, to -wit; (a) That except as herein otherwise provided, the - • financing documents and all rights now or hereafter acquired thereunder, are, and shall be subject to each and all of the covenants, conditions and re- strictions set forth in the Main Lease, . and to all rights and interests of the Lessor therein, none of which are or shall be waived by this consent; . - - - (b) That should there be a conflict between the provisions of the Main Lease and the provisions of the financing documents, the former shall control; (c) That if the leasehold estate of the Lessee • which is the subject of the financing documents shall be foreclosed or otherwise acquired under the terms of the financing documents, the trans - feree thereof shall thereupon and therby assume the performance of and shall be bound by each and all of the covenants, conditions and obligations provided in the Main Lease to be performed and ob- served by the Lessee thereunder; (d) That nothing in this Consent shall be deemed to prohibit the assignment by the holder of the evidence of the indebtedness secured by the financing documents, together with the financing documents without the prior consent of the Lessor; (e) That the Lessor agrees that it will not termi- - nate the Main Lease because of any default or breach thereunder on the part of the Lessee if the holder of the financing documents, within thirty (30) days after the service of written notice from the Lessor of its intention to terminate the Main Lease for such default or breach, shall either cure such de- fault or breach, if the same can be cured by the payment of money, or if .otherwise, shall undertake in writing with and for the benefit of the Lessor, to keep and perform all of the covenants and condi- tions of the train Lease- provided therein to be kept and performed by the Lessee until such time as the leasehold estate of the Lessee shall be sold upon - foreclosure pursuant to the financing documents, or shall be released or reconveyed thereunder; provided, however, that if the holder.of the - financing.documents shall fail or refuse to comply with any and all of the conditions of this Subpara- graph (e), then and thereupon the Lessor shall be released from the covenant of forebearance herein contained, and any notice provided for in this sub- -2- 0 La 10040r"i641 paragraph (e) shall be for the service of notices, and shall be delivered or directed to the holder of the financing documents at its address as last shown on the recoras of the Lessor; (f) That the Lessor assumes no liability or respon- sibility for the order of priority of the financing documents or the relation of it to.any other deed of trust affecting said leasehold estate; (g) That upon and immediately after the recording of the financing documents the Lessee, at its own expense, shall cause to be recorded in the office of the County Recorder of said Orange County a written request executed and acknowledged by the Lessor for a copy of any notice of default and of any notice of sale under the financing documents as provided by the statutes of the State of Cali- fornia relating thereto. Concurrently with the recordation of such financing documents, the Lessee shall furnish to the Lessor a complete copy of the financing documents, together with the name and address of each holder thereof; (h) That this form of Consent shall be recorded contemporaneously with the recordation of the original of the financing documents herein re- ferred to and to which this Consent relates, in which event the copy of the financing documents attached hereto shall not be recorded. This Consent is conditioned upon the execution by the Lessee :and by U. S. Financial Corporation, or such of its sub- sidiary or affiliates or such other corporations, persons or entities as may be specifically approved by the CITY OF NOKPORT - BEACH, which are the Grantees or Beneficiaries under the financing documents described above, of the acceptances and agreements at- tached hereto and made a part hereof. This Consent is further conditioned upon review and final approval by the City Attorney of the legal documents neces- sary to carry out the assignment. Prior consents of Lessor dated December 28, 1965 (as amended by. the consent dated July'- 8;...1968) -and dated August 14, 1967 concerning the Main Lease are not modified or affected by this Consent. Dated: 7.z C.m[;c,Z ri , 197/ DON dm 12/7/71 -3- CITY - OF NEViPORT B£e?GH Mayor '. By ;_ City Clork so M RESOLUTION NO. 7 9 2 7 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH APPROVING OF FIDELITY MORTGAGE INVESTORS AS A SECURED LENDER ON BALBOA BAY CLUB LEASEHOLD PROPERTY WHEREAS, on December 15, 1971, the City Council by Resolution. NO. 7586 and Consent of Assignment, . approved the conveyance of the Balboa Bay Club's leasehold estate to U. S. Financial Corporation in an amount not to exceed $13,200,000 for the purpose of refinancing the Balboa Bay Club; and WHEREAS, pursuant to said Consent Document, the Balboa Bay Club has assigned a certain portion of the lease- hold estate to U. S. Financial Corporation to secure a loan in the amount of $6,650,000; and WHEREAS, the Balboa Bay Club wishes to convey the remainder of the leasehold estate to Fidelity Mortgage Inves- tors to secure an additional loan in the amount of $4,594,000; and WHEREAS, Fidelity Mortgage Investors is not an affiliate or subsidiary of U. S. Financial Corporation and accordingly.under the terms of the original Consent Document the prior approval of the City is required; and WHEREAS, it appears to be in the best interests of the City of Newport Beach to approve Fidelity Mortgage Inves- tors as a secured lender on the remaining Balboa Bay Club leasehold property. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Newport Beach hereby approves of Fidelity Mort- gage Investors as a secured lender in the amount of $4,594,000 on the Balboa Bay Club leasehold property. BE IT FURTHER RESOLVED that this approval is subject to the same terms and conditions contained in Resolution No. -1-