McCourt is in default on small S. Boston site

Landowner Frank H. McCourt Jr. bought the Los Angeles Dodgers early this year for $430 million, and a new home for $25 million, but he's at least two months in default on a small South Boston property with an empty building on it.

McCourt's lender on 51 Sleeper St., along the Fort Point Channel in the developing Seaport District, is offering the $22 million note for sale as "non-performing and in default" because he has not paid interest or principal since April.

The sale is characterized in documents obtained by the Globe as a "conversion opportunity," meaning that any new owner could change the use of the building, which was office space and is now empty. According to the offering, McCourt's last payment was on April 1. Total monthly payments on the loan are $232,120. McCourt took the loan out in the amount of $23 million in 1999.

Hunneman Capital Group of Boston is handling the sale of the note -- which has an interest rate of 10.81 percent that bumped up to 15.81 percent because of the default on payments, according to a summary of the offering.

The loan was originated by Morgan Guaranty Trust Co. but has been sold to a pool of investors.

Asked about the sale, McCourt yesterday responded through a spokesman, saying, "We have been having discussions with the lender, and we think that we're close to a resolution which will hopefully satisfy the lender's concerns."

Resolution could include refinancing at a lower interest rate, with McCourt maintaining ownership.

The half-acre site is one of the pieces of a 24-acre puzzle that McCourt has put up for sale, though he has insisted that it is not imperative that he sell the land in order to hang onto his heavily leveraged Dodgers baseball franchise.

McCourt moved his family to Holmby Hills, a high-priced suburb of Los Angeles, so he and his wife and business partner, Jamie McCourt, can run the team. The $25 million dollar home is in the same neighborhood as Hugh Hefner's Playboy mansion.

The 149,118-square-foot South Boston building has been vacant since January, when the state Department of Revenue moved out. It sits on one of two plots that total about an acre and were being marketed for residential development, but the loan is secured only by the building and the land under it.

"The building is currently 100 percent vacant, which will likely result in continued nonpayment," the Hunneman document notes. Whoever purchases the loan "may need to exercise its remedies under the loan documents, which may include . . . foreclosure," it says.

A Boston real estate executive, who asked not to be identified, said that McCourt could simply let the building go up for sale, because in the current market it may not be worth as much as the loan.

The loan is a nonrecourse type, meaning that McCourt's personal wealth would not be at risk if the loan is foreclosed on.

The eight-story building was built in about 1900 and renovated in the mid-1980s. If McCourt loses the building, he would still control the development and parking space around it. Most of his South Boston property is vacant and currently used to park cars.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com; Steve Bailey at sbailey@globe.com