Land Eyed by Target Falls to Foreclosure

A 19-acre property that was eyed last year by discount retailer Target is now undergoing foreclosure. The land is located at La Madrona Drive, Scotts Valley, California. The property is scheduled to be auctioned starting December 28.

The property was used as a security for a $4.65 million loan obtained by its two owners, Adeline Investments Inc and Title Two Investment Corp, in March 2007 from East West Bank. The lender disclosed that the borrowers did not make the agreed upon payment due in December 2009. The companies also failed to make payments on subsequent installments. The default notice was filed last February.

According to the sale notice released last week, the loan amount is now worth $5.653 million. The county assessor’s office has assessed the land at about $4.86 million. Property taxes were at $140,237 in the last six months to December 10. The original owner of the property was forced to pay $380,619 worth of delinquent land taxes.

Scotts Valley City Management said it has not heard from the two companies for quite some time. The office added that it has no idea what the financial situations of the two are, as of the moment.

Adeline Investments is headed by David Choo, a Nevada-based investor who is prominent in San Francisco as a Real Estate buyer. According to documents, Mr. Choo’s California Mortgage and Realty Fund II LLC have filed for bankruptcy court protection and have announced plans to reorganize last March 2009. Sources say the company has incurred combined losses of up to $22 million from then on.

Mr. Choo was also the registered owner of the other company, Title Two, until July 12. After that, the business was acquired by Frontier Ridge Global Fund, a New York-based hedge fund. Title Two has also defaulted in a separate loan.

The land situated in La Madrona Drive was held as collateral, together with another property at 524 Howard Street in San Francisco, for Adeline Investment and Title Two’s loan. As mentioned, the lot was eyed by Target as a possible site of its new location in the middle of 2009. But the retailer had a dispute with Title Two.

Target instead bought a vacant building, Gottschalks, within the premises of the Capitola Mall. Meanwhile, the Scotts Valley land has remained undeveloped.

For more news and information about foreclosure, go to ForeclosureConnections.com.