The developer and majority owner of The Harbor in Rockwall, Rob Whittle, has filed Chapter 11 bankruptcy in an attempt to restructure the development’s mortgage so he can lower rents for retailers.
“The hotel, restaurants and Cinemark are doing phenomenal,” he said. “The goal is to restructure the mortgage so we can pass on some rent concessions to the retailers.”
The city took on debt to fund improvements at The Harbor and created a special taxing district there. It plans to repay the debt through property and sales taxes from the tax-increment financing district.
“It’s something that Rob has done to work with his lenders to be able to lower some of the rents at The Harbor,” Cecil said. “In this kind of environment, Rob probably should have the ability to lower some of those rates. He doesn’t and that’s what he’s working on.
The Chapter 11 bankruptcy filing lists Whittle as the “debtor in possession” under a 30-day court order that allows the developer to use some of his cash collateral to cover operating expenses. The Chapter 11 bankruptcy also listed Whittle’s assets at $42.9 million and his liabilities at $29 million, most of which is made up of a $28 million mortgage on The Harbor development.
The major issues facing The Harbor development is a protracted recession that has hit many retailers hard and rents that are at least 25 to 30 percent higher than the local market. In addition, the commercial real estate industry is being hit with historically low occupancy rates which are driving many developers into bankruptcy. Under those conditions Whittle is left with very few choices for resolving the quagmire he is faced with-he can either restructure his property debts in the Chapter 11 bankruptcy or sell The Harbor development outside of bankruptcy. And he may not want to sell the property in lieu of bankruptcy if he believes there is the possibility of long-term profits to be earned from the property after a successful Chapter 11 bankruptcy.