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Vornado to walk away from High Point mortgage, Journal says

Will turn properties over to special servicer

Gary Evans -- Furniture Today, July 28, 2010

HIGH POINT — Owners of Market Square and other Merchandise Market Properties Inc. here have decided to walk away from a $191 million mortgage, letting it revert to a special servicer overseeing the mortgage, the Wall Street Journal reported Tuesday.

Vornado Realty Trust, among the country's largest landlords, is opting to forfeit the property after being more than 90 days delinquent in payments and turn it over to the servicer J.E. Robert Cos. in a deed-in-lieu of foreclosure, the paper said.

J.E. Robert Cos. apparently would look for another purchaser, a task that may be difficult in the current economy.

The properties include about 2 million square feet of showroom space in downtown High Point, including Market Square, Furniture Plaza, the National Furniture Mart, Plaza Suites and other buildings.

The Journal said Vornado stopped paying on the mortgage earlier this year after the property's cash flow no longer covered the interest costs.

MMPI officials in High Point did not return calls seeking comment.

Industry executives said they didn't think exhibitors or buyers will notice any differences in the properties, but some tenants were concerned.

"As a tenant of the building, I think it's a legitimate concern as to whether or not a special servicer will be able to take care of the building the way a professional show organizer would," said John DeFalco, senior executive vice president of importer Primo International, which leases about 19,000 square feet on the ninth floor of the National Furniture Mart.

"It really comes down to a wait-and-see scenario. We'll have to work with the special servicer to determine how it's going to move forward and hope they do as good a job as MMPI did," DeFalco said.

"We are obviously a very interested party and are watching in hopes that this is not disruptive in any way," said Alex Shuford III, vice president of sales for Century Furniture, which, with sister company Highland House, occupies about 65,000 square feet in Market Square. "When the Wall Street Journal reports about it, it is one of those things we start to worry about. When you start talking about a building the size of Market Square, you don't want to read about things like that. We have become very interested in what the outcome will be."

Shuford noted, however, that when the company contacted MMPI, it was told not to be concerned over the financial situation involving Vornado.

Senior Retail Editor Clint Engel and Associate Editor Thomas Russell contributed to this story.

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