Faced with nearly $17 million in debt that must be retired by Nov. 1, NOVA Real Estate Investment Trust of Falls Church yesterday filed for reorganization under Chapter 11 of the federal bankruptcy code. NOVA is only the 13th American REIT ever to file for bankruptcy.
"We had a lot of debt that was coming due Nov. 1 and we knew we weren't in a position to pay them," said William Corish, president of the trust.
The trust was unable to pay the $11.77 million principal of its 4 percent senior intermediate and $5.08 million principal of its 4 percent floating rate senior subordinated notes which mature Nov. 1. Corish said that the trust would not pay accrued interest due on either class of notes.
"The maturity date just got here too fast," he said. "We show assets, but they're tied up in long-term mortgage loans."
As of June 30 NOVA had assets totaling $30.5 million and about $21 million in liabilities. It has shareholders equity of $9.6 million.
That debt figure was reduced by $3.1 million Oct. 21 when the trust made a tender offer to buy up to $7 million of the 4 percent note at 60 cents on the dollar.
NOVA was organized in 1972 as First Virginia Mortgage and Real Estate Investment Trust.