Baton Rouge developer J.T. “Tommy” Spinosa’s $350 million dream for Perkins Rowe dissolved Wednesday at a foreclosure sale that attracted one bid — $69.3 million.
A group of banks now owns Spinosa’s mixed-use project at the intersection of Bluebonnet Boulevard and Perkins Road.
An Ohio lender, KeyBank National Association, made the only bid at the court-ordered auction at the federal courthouse in Baton Rouge. KeyBank represents eight other lenders in the four-year-old dispute with Spinosa. The banks possess a court judgment for more than $201.9 million against the developer, who personally guaranteed repayment of his firms’ debts.
Despite more than four years of bitter litigation, Spinosa appeared cooperative Wednesday when asked about a continuing dispute over a facility that cools Perkins Rowe during the high heat of Louisiana summers.
Spinosa said in a written statement that he will continue to supply chilled-water for air conditioning of the development’s 87 condominiums, 226 apartments, more than 60 shops and restaurants, bookstore, grocery store, fitness center, pharmacy and movie complex.
“While we will consider our legal alternatives, we are ready to put this behind us and return our attention to our core projects,” Spinosa said in a statement released by spokeswoman Kelly Vastine.
“As for the chilled water issues, the operator (another Spinosa firm) intends on maintaining the status quo — the prompt and continual delivery of air conditioning through chilled water to Perkins Rowe and its tenants,” Spinosa wrote.
A spokeswoman for KeyBank’s headquarters in Cleveland, Ohio, declined comment Wednesday on the foreclosure auction and the remaining dispute over chilled water. A bank spokesman in New York did not respond to additional telephone and email requests for comment.
KeyBank spokeswoman Laura Mimura said last year that Perkins Rowe tenants and patrons would not notice any changes after any foreclosure sale.
Baton Rouge attorney Brett Furr, a partner at Taylor Porter, is familiar with foreclosure practices.
Furr explained that KeyBank and the other lenders will not pay a dime of their $69.3 million bid for Perkins Rowe.
“It’s a credit bid,” Furr said. “That’s the term.”
And that benefits Spinosa, Furr added. The developer’s $201.9 million debt was instantly reduced to $132.6 million by the banks’ bid for Perkins Rowe.
Furr noted that Spinosa could have blocked the foreclosure sale by filing for bankruptcy court protection from creditors. But, since no bankruptcy case was filed, the developer has lost any claim for ownership of Perkins Rowe.
“That ship has sailed, and it ain’t coming back,” Furr said.
Spinosa, however, continues to hold a trump card in the form of his control of the chilled-water plant that enables people to live or work or shop at Perkins Rowe, Furr added.
Furr said that means KeyBank must “either make a deal with Tommy … or build its own facility.”
Added Furr: “Banks are not in the business of owning real estate. They’re in the business of making loans. I believe they’ll put the property on the market quickly.”
Spinosa said in 2005 he envisioned a $350 million development that included more than 800 residential units at Perkins Rowe.
KeyBank granted Spinosa’s Perkins Rowe firms a $170 million construction loan in 2006 and brought in eight other participating lenders to share that risk. After October 2008, Spinosa’s firms ceased to make any payments on that loan, according to court records.
Less than half of the planned residential units were constructed, and some of the existing apartment units were left unfinished by the time KeyBank sued Spinosa in July 2009 and asked U.S. District Judge James J. Brady to order a foreclosure sale.
Brady awarded KeyBank the $201.9 million judgment last September.
In January, Brady gave the bank permission to sell the property at a foreclosure auction. But the first three sale dates were postponed.
Now, KeyBank is the landlord at Perkins Rowe.