Perkins Rowe developer says process unfair
By Bill Lodge
Advocate staff writer
October 18, 2012
Baton Rouge developer J.T. “Tommy” Spinosa wants a federal judge to slow down an Ohio lender’s request to sell his Perkins Rowe mixed-use project at foreclosure with a price floor of $86 million.
“It is abundantly clear that KeyBank (National Association, of Cleveland) intends on pursuing a strategy that will rush the foreclosure sale and render (Spinosa’s) appeal rights nearly meaningless,” Spinosa attorneys said in a court filing Monday night. That filing was signed by attorneys Mark R. Beebe, of New Orleans, and William D. Shea, of Baton Rouge.
KeyBank spokeswoman Laura Mimura said Tuesday: “We’re not going to comment today on Spinosa’s filing. We will respond in the court record.”
Spinosa lost control of Perkins Rowe in late 2009, when KeyBank filed its foreclosure suit and alleged it had not received any payments on a $170 million construction loan since October 2008.
U.S. District Judge James J. Brady appointed the Chicago firm of Jones Lang LaSalle Americas to manage the development. The judge later dismissed all of Spinosa’s defenses and counterclaims after the developer and three of his Perkins Rowe companies refused to turn over records requested by KeyBank.
Last month, Brady awarded $201.9 million to KeyBank and eight other lenders represented by KeyBank. The judgment was against Spinosa’s firms, but he had personally guaranteed repayment of their loan.
KeyBank then asked Brady to approve a foreclosure sale of the property near the intersection of Bluebonnet Boulevard and Perkins Road. KeyBank said an appraisal in March valued the development at $86 million. Bank officials said a foreclosure sale could be conducted a month after the property was properly advertised.
Brady ordered Spinosa to file any objections to KeyBank’s sale plan no later than Monday night.
Sale of the development for $86 million could leave Spinosa facing demands for $115.9 million from his personal assets.
Spinosa had several objections to the bank’s sale plan.
Spinosa told the judge a new appraisal should be conducted because KeyBank’s latest appraisal was performed in March, seven months ago.
In addition, Spinosa’s attorneys argued, a foreclosure sale this year likely would mean the 5th U.S. Circuit Court of Appeals would not decide in advance of the sale whether to grant Spinosa’s request that the case be stripped from Brady’s control and transferred to state district court for trial.
“KeyBank proposes that a single appraisal, filed under seal, govern the sales price for this foreclosure sale,” Beebe and Shea wrote the judge. “Louisiana law provides that the borrower has the right to submit an appraisal.”
Under a seal that prohibits public viewing, KeyBank filed 24 pages of its 105-page appraisal report, the Spinosa attorneys noted.
“At a minimum, the court should direct KeyBank to file and ‘unseal’ the entire appraisal,” Spinosa said through his lawyers.
Despite being unfinished, Perkins Rowe has proved both popular and profitable, according to officials of both KeyBank and Jones Lang LaSalle.
The development has 87 condominiums, 226 apartments, more than 60 shops and restaurants, a book store, grocery store, fitness center, movie complex and pharmacy.
Unless Brady delays the foreclosure sale, Spinosa argued in his filing, KeyBank will use its appraisal of $86 million as a credit to make its own bid on Perkins Rowe and scare other potential buyers away from the project.
“Why hide the details of the appraisal from the public and potential bidders unless you intend to chill the bidding process?” Beebe and Shea asked Brady.
Spinosa suggested in his filing that Perkins Rowe should be reappraised and marketed for approximately one year to obtain the highest possible price at auction.
Spinosa also asked the judge to determine whether the developer should be credited for payment of $13.55 million toward his firms’ debt to KeyBank.
“For the years 2010, 2011, and through the first six months of 2012, Perkins Rowe has generated no less than $13.55 million in net income,” Spinosa said through his attorneys. Those attorneys noted that the profits are listed in reports filed in the court record, under a seal that blocks public scrutiny.
“In calendar year 2012 alone, Perkins Rowe is expected to generate $9.5 million in net income, if the property continues on its current earnings path,” Beebe and Shea wrote the judge.
Those reports should be unsealed, Spinosa’s attorneys argued.
Beebe and Shea also wrote that KeyBank wants to market the remaining 38 condominiums as a package priced at less than $100 per square foot.
Existing condo owners “paid approximately $306 per square foot,” Spinosa’s attorneys told Brady.
“The court should require the condominiums to be sold separately to secure the highest and best price,” Spinosa argued through his lawyers.