DATE: Saturday, August 16, 1997             TAG: 9708160245

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY MIKE ABRAMS, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:   71 lines

OFFICES' OWNER FILES CHAPTER 11 RESTRUCTURING WILL NOT AFFECT TENANTS IN PEMBROKE BUILDINGS

An Alabama partnership that owns Pembroke Office Park on Virginia Beach Boulevard has sought protection from its creditors in a Chapter 11 bankruptcy filing.

Virginia Beach Associates Ltd., owes several million dollars to creditors despite the fact that its seven buildings are nearly full, according to interviews with real estate developers and an attorney for the partnership.

The Montgomery, Ala., partnership bought the 12.4-acre property with its white-and-brown buildings in 1984 for $18.3 million. They are in the middle of what later became a major concentration of office buildings.

Sherri T. Freeman, a Birmingham, Ala., attorney for Virginia Beach Associates, said the partnership owes about $14.7 million in principal on a first mortgage held by Allied Capital of Washington, D.C. The partnership also owes Allied Capital a disputed debt of $3.8 million.

The partnership filed its bankruptcy petition Monday in the U.S. Bankruptcy Court in Montgomery.

Chapter 11 will allow the partnership to restructure its debts under court protection from creditors. Debtors in Chapter 11 usually are allowed to continue operating the business.

The city of Virginia Beach recently assessed the partnership's land and buildings at nearly $12.3 million - $6 million less than what the partnership paid.

The resulting property taxes on that assessment would approach $150,000 annually.

The partnership's plan for restructuring its debts must be submitted within 120 days of the bankruptcy filing, which was Monday.

Freeman said the next step in the process is a meeting with creditors Sept. 22 in Montgomery.

William W. Jordan, a partner and executive in the ownership group, referred all questions about the bankruptcy to Freeman.

Construction of the six-story Pembroke One building near the intersection of Independence and Virginia Beach boulevards began in 1971. During the next decade, six other buildings went up. They range in height from one to six stories.

Today, the complex has 329,000 square feet of floor space. Its roster of tenants includes NationsBank, Gibson World Travel, and an Army recruiting office.

Freeman said the bankruptcy filing won't hinder operations in the office buildings.

``The services to the tenants will not be interrupted,'' she said. ``The tenants won't notice a difference.''

Despite learning about the bankruptcy petition, some real estate developers familiar with the group of office buildings were quick to say it should remain a vibrant property.

``It's a good office complex,'' said Gerald S. Divaris, president of a large commercial real estate firm based in Virginia Beach. ``It's full. It always has been full.''

Michael Katsias, a longtime Virginia Beach real estate broker, said, ``It was the flagship property in the early 1970s.''

However, newer buildings eventually came along and offered bigger parking areas, larger lobbies and more elegant construction.

The operators of the newer office buildings raided Pembroke to lure tenants away, which took a toll on the park, Katsias said. ILLUSTRATION: [Color Photo]

D. KEVIN ELLIOTT

The Virginian-Pilot

The Debts

Virginia Beach Associates Ltd. owes $14.7 million in principal on a

mortgage, and a disputed $3.8 million to the same lender, on the

buildings at Independence and Virginia Beach boulevards.

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu