On Aug. 2, Rhythms filed for bankruptcy. Eight days later, it announced it had fired its remaining 700 employees and notified customers that service will end in a month. The company, whose stock had risen as high as $93.13 per share, had fallen to $0.02. When it filed for bankruptcy, it listed $698 million in assets and $847 million in liabilities.
The company rents 51,883 sf in AmeriVest Properties Inc.'s office building along the Southeast Corridor.
It's an unusual deal for AmeriVest, which is the nation's only major, publicly-traded REIT that caters only to small and medium-sized tenants.
''When we bought Panorama Point, we planned to subdivide for multiple, 3,000-sf tenants,'' William Atkins, AmeriVest chairman and CEO tells GlobeSt.com. ''But Rhythms came coming back to us, offering us more and more money, until they gave us an offer we couldn't refuse.''
Rhythms is current on all rent payments and AmeriVest holds a $335,000 security deposit from the company. And since leasing the building in May 2000, Rhythms pumped in more than $500,000 in tenant improvements into the building.
Still, because of Rhythms' bankruptcy, AmeriVest took a non-recurring, non-cash charge of $326,113 in unamortized deferred rent. And it also accelerated the amortization of the $323,447 in unamortized lease commission related to the Rhythms lease.
''We're not sure what's going to happen, but we decided to take the most conservative route,'' Atkins tells GlobeSt.com.
He notes that while the company may choose to assume or reject the unexpired lease at Panorama Falls, it is obligated to continue to make rent payments until the lease is rejected. It is current on the lease through the end of August.
Comcast Corp. leases the remaining 10,080 sf at Panorama Falls and indicated it may want more if Rhythms leaves.
''When AmeriVest purchased Panorama Falls, the building was configured with offices, systems and technology infrastructure designed to accommodate small to mid-sized tenants," Atkins says. ''When Rhythms ultimately vacates its space, the space is easily modified of the smaller tenant we target. We are optimistic about prospects for the Rhythms space at Panorama Falls should it become available.''
Asked by GlobeSt.com if he regrets leasing the building to Rhythms, Atkins says no.
"It's an atypical deal for us, but it's been a good deal for us,'' he says.
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