Perkins Rowe developer appeals foreclosure ruling
Developer J.T. “Tommy” Spinosa’s three-year courtroom war to regain control of his Perkins Rowe mixed-use project could last years longer, according to the experiences of a real estate lawyer not involved in the fight.
“Who knows how many months or years?” mused Matt Mullins, a Baton Rouge lawyer and partner at Taylor Porter.
Mullins was asked for insights into how such long-term disputes play out.
The lawyer prefaced his comments by stating that he has no firsthand knowledge of the details of Spinosa’s continuing dispute with an Ohio lender, KeyBank National Association. Mullins also confirmed that he does not represent either Spinosa or KeyBank, which won a federal court judgment for more than $201.9 million against Spinosa last week.
The developer lost control of Perkins Rowe shortly after KeyBank filed its foreclosure suit in July 2009. The lender alleged it had not received any payments on a $170 million loan since October 2008.
U.S. District Judge James J. Brady quickly appointed Jones Lang LaSalle Americas Inc., of Chicago, to manage the development’s retail space, office space, 87 condominiums and 226 apartments.
Retail space is spread across more than 60 restaurants and shops, a book store, grocery store, movie complex and pharmacy.
The development is near the intersection of Bluebonnet Boulevard and Perkins Road.
Now, Brady has authorized KeyBank to initiate the foreclosure sale of Perkins Rowe through the Sheriff’s Office.
Through New Orleans attorney Mark R. Beebe, Spinosa announced last week that he will ask the 5th U.S. Circuit Court of Appeals to reverse Brady’s decision.
Such appeals can require months, even years, for a Circuit Court decision, Mullins acknowledged. And the losing party could then appeal to the U.S. Supreme Court.
Whether lenders, armed with court orders, immediately schedule a sheriff’s sale or wait until a borrower’s appeals are exhausted, such sales can be blocked, at least temporarily, Mullins noted.
“One thing you see often in foreclosure, the day before the sale, the debtor files for bankruptcy,” Mullins explained. “That stops everything.”
A bankruptcy case can require months or years for completion, Mullins added. A bankruptcy-court decision, like those rendered in a district court, can be appealed, extending the dispute for more months or years.
Information supplied by KeyBank to Brady suggests that Spinosa and his Perkins Rowe companies now owe the lender far more than the development’s current value.
Bank officials said in court filings last month that Cushman & Wakefield estimated in March that Perkins Rowe is worth only $86 million — far less than the more than $201.9 million the judge ordered Spinosa and his firms to pay the bank last week.
As to what happens if an eventual foreclosure sale fails to produce enough money to cover a borrower’s unpaid loan, Mullins said the law is clear: “If the sale is with an appraisal, the borrower remains responsible for the remaining debt.”
Mullins explained: “Let’s suppose there was a construction loan of $10 million, and the property brings only $8 million at a sheriff’s sale with an appraisal. The borrower and any guarantor remain responsible for repayment of that remaining $2 million of debt.”
If the borrower is unhappy with the price obtained at the sheriff’s sale, Mullins said, he or she “does not have a cause of action for any (alleged) failure by the lender to market the property prior to the sheriff’s sale.”
Mullins added: “The sheriff has an obligation to advertise the property, but the bank does not. The bank has no obligation to market the property.”
Growth, profit, ‘Cheers’
Perkins Rowe has proved itself a profit maker, according to officials of Jones Lang LaSalle.
Rick Balow, the management firm’s vice president and general manager, said 85 percent of the development’s office space is leased.
Retail space is 83 percent leased, and Balow said negotiations are in progress with two restaurants and two clothing stores that are considering a move to Perkins Rowe.
Of the 138 completed apartment units, 96 percent are rented, Balow reported. Another 88 had not been completed before KeyBank filed for foreclosure more than three years ago. And only 44 percent of the completed units were occupied then, he said.
Of the 87 condo units, all have been completed and 49 have been sold, Balow said.
“We’re keeping it vibrant and moving forward,” Balow said. “At a lifestyle center like this, food is the anchor. Restaurants are really doing well here. They are all doing phenomenally well.”
In 2010 and 2011, Balow said, annual profits ranged between $800,000 and $1 million. He said this year’s profits should total about $1.4 million.
All profits have thus far been plowed back into Perkins Rowe, Balow added.
Apartment sizes range from 606 square feet to 1,391 square feet, said Michelle Rabalais, apartment manager. And tenants have controlled-access underground parking.
Every Thursday in September and October, free concerts are staged from 6 p.m. until 9 p.m. at the development’s Town Square Park, immediately east of the movie complex, said Paula Biggs, marketing/specialty leasing manager at Perkins Rowe.
Several apartment renters said they look forward to those concerts and make regular use of nearby restaurants.
News of courtroom clashes over control of Perkins Rowe has not eroded their affection for the place.
Kim Warner, 41, an engineering manager at a telecommunications firm, said she is a fourth-year renter at Perkins Rowe.
“It’s been a fun, jam-packed, interesting stay,” Warner said. “It’s cool. We’ve created this Perkins Rowe family.”
“And all these restaurants are in my backyard,” Warner said. “It’s like going to ‘Cheers’ when you walk in.”
Bonnie Eslick, 25, is the manager of a clothing store at Perkins Rowe. Eslick also lives in an apartment at the development.
Each morning, Eslick said, “I take the elevator down to the street, and I’m one door away. It’s a one-minute commute. No gas required.”
Last month, when a wreck closed nearby Interstate 10 overnight, Eslick recalled, “I didn’t have to leave (Perkins Rowe) for anything. Everything was right here.”
Larry and Dawn Rabalais, two-year renters, became parents to daughter Marcella about a month ago.
Dawn is a pediatrician at St. Elizabeth Hospital in Gonzales, and Larry, retired after 20 years in the U.S. Navy, is majoring in history at LSU and planning to become a high school teacher.
“The things we like to do are so accessible here,” Dawn said.
“And this place is immaculately maintained,” Larry added.