Jones Lang LaSalle is launching a marketing campaign to sell 441 Stuart St., an 11-story Art Deco building in Boston’s Back Bay, as the building’s owner, Corus Bankshares, fights for its life.
"We have a full expectation of achieving a price in excess of $20 million," Mike Smith, a managing director in Jones Lang LaSalle’s capital markets group, told Banker & Tradesman.
Corus, the troubled Chicago-based lender, claimed the 163,000-square-foot building for $17 million in a May foreclosure auction. Corus was the originator of a $42 million construction loan for the building. The building’s owner, Apollo Real Estate Advisors’ Value Enhancement Fund V, had designs on converting it into 111 luxury condominium units.
Apollo only got as far as gutting 441 Stuart’s former Class B office space before it became embroiled in a prolonged legal battle with one of the building’s tenants. That battle caused Corus to miss the luxury condo market, and default on its construction loan. Corus initiated foreclosure proceedings this past spring. The building last sold outright in May 2004, for $37.5 million.
441 Stuart remains permitted for residential development, but "part of the beauty is, it can be a lot of things," Smith said. It was previously used as office space. Many have speculated it could wind up as a hotel. At auction, Corus touted the building’s deep foundation and potential for vertical expansion.
"I know one thing," Smith added. "Nobody is making any more land on the corner of Stuart and Dartmouth."
Corus told the SEC this week it won’t be able to report second quarter earnings anytime soon, as it has been busy trying to avoid being seized by the FDIC. The bank has warned it is "critically undercapitalized," and it has been chasing new investors that might stave off FDIC intervention. No investors have bitten yet.
Corus’ business was bankrolling large-scale condo developers. Its construction loans were heavily concentrated in Arizona, Nevada, south Florida and southern California. Corus has approximately $3.1 billion in nonperforming assets on its books.
In its letter to the SEC, Corus estimated its second quarter losses will come in at $487 million, which would bring its year-to-date losses to $788 million. This time last year, Corus was only $11.7 million in the red.
Smith said it’s possible the bank’s problems could complicate the sale. Ultimately, though, its foreclosed assets have to move, whether it’s Corus, the FDIC or an outside investor moving them.
