New York-based Lehman Bros. has begun efforts to foreclose on the 62-unit Tremont Towers, an 18-story condominium development in Boston that is still under construction.
Despite an apparent strike by Lehman Bros. to foreclose on a condominium project nearing completion across from Boston Common, the owner of the 62-unit Tremont Towers vowed last week he will fight to thwart the action, and said he is simultaneously seeking to refinance the upscale development.
“I’m not losing the building,” insisted William T. Matt. “I will hold onto the property.”
While Matt declined to discuss the imbroglio in detail, and Lehman Bros. did not respond to inquiries by Banker & Tradesman’s press deadline, the developer acknowledged that there is a movement underway by New York-based Lehman to seize his project. “I’m in shock,” Matt said of Lehman’s efforts, adding he considers the firm’s approach to be unsupportable on legal grounds.
Matt would not outline the terms of his financing agreement with Lehman or what triggered the lender’s decision. According to one real estate source following the situation, however, Lehman is claiming that Matt did not deliver on specific requirements mandated in the agreement, although the source was unclear whether those allegedly unmet requirements were financial or were related to a timely completion of the building.
In either case, Matt claimed there is “no basis” to support Lehman’s position. In response to his lender’s aggressive efforts, Matt said he is actively meeting with other financial sources to buy out Lehman’s interest. “Currently, Tremont Towers is undergoing a voluntary restructuring of the financing … which we hope to have completed within the next few months,” said Matt, expressing confidence he will ultimately find a financial source for the prominent development.
Whatever the issues clouding the situation, Matt heretofore has been seemingly able to pull off a project many had felt was beyond his capabilities considering the size of the undertaking and the complexities of developing one of the city’s premier downtown sites. While relatively unknown in Hub development circles, Matt assembled the land and guided his plan through the city’s difficult approval maze, then was able to secure the financing to get the project underway. The 18-story Tremont Towers is now about 95 percent completed, said Matt, who did encounter other legal battles along the way, including litigation with Macomber Construction Co. that extended to the state’s Supreme Judicial Court.
Tea on Two
Tremont Towers was designed by Cambridge architect Jung/Brannen Assoc. and is seen aesthetically as filling what had long been described as Tremont Street’s “missing tooth.” One portion of the site was the longtime home of Little Jack Horner’s Joke Shop and was targeted for development in the 1980s before the recession hit the region and quashed most new development in downtown Boston
Tremont Towers’ neighbors include the luxury Tremont on the Common residential building and the Ritz Carlton Towers, a $470 million mixed-use complex developed by Millennium Partners.
Although the legal battle does appear to be heating up, Matt said he is confident that the marketing of the condominiums will continue to attract interest, with the city’s luxury residential market still relatively healthy despite the lingering economic downturn. While he would not discuss how many units have been spoken for to date, Matt said he is enthused by the response. “People are bombarding me to buy at Tremont Towers,” he said, citing such attractions as high-end finishes, sweeping views of Boston Common and the city and a $1 million “tea room” on the second floor for residents to enjoy.
The city’s Midtown district where Tremont Towers is situated certainly has attracted an impressive surge of interest among residential developers. After wallowing in urban blight for years, particularly following the real estate crash of the late 1980s, the area has seen a plethora of national residential developers arriving recently with grandiose plans for new housing construction.
Millennium’s Ritz Carlton project yielded 850 condominiums that have been fetching seven-figure prices, while Charles E. Smith Residential has teamed with local developer Kevin Fitzgerald to construct a 419-unit apartment building a few blocks away from Tremont Towers. Other developers pitching luxury housing nearby include Equity Residential and Lincoln Property Co., a pair of leading national players that have teamed up with a plan to build a residential property on the city-owned Hayward Place, also located a stone’s throw from Tremont Towers.
The Midtown market is not the only downtown Boston neighborhood witnessing an infusion of interest for residential construction, with projects underway or recently completed in such areas as North Station, the South End and the Back Bay. And while it has stonewalled Equity and Lincoln in their plans for Hayward Place, the Boston Redevelopment Authority has rolled out the welcome mat for downtown residential construction. The BRA has lobbied to change zoning regulations and streamline the approval process to encourage such investment.
