Florida Street Holdings, the New York-based investor group that owns the Chase South Tower at 451 Florida St. downtown, has settled a foreclosure lawsuit over the 21-story high-rise, and the case has been dismissed from the U.S. District Court.
The resolution occurred in August, when U.S. Bank—the lender on the project, which was owed some $22 million—“assigned its rights” to a new creditor, TCG Chase Tower. In other words, the bank sold the mortgage on the building to a new creditor.
According to court documents filed Aug. 26, “TCG and (Florida Street Holdings) have settled all claims between them,” and jointly asked the court to dismiss the case. A week later, U.S. District Judge Shelly Dick granted their request.
Court documents do not identify the parties or individuals behind TCG Chase Tower, which is a Delaware-based limited liability corporation formed in May.
Court records also contain no information about the terms of the settlement between TCG Chase Tower and Florida Street Holdings. But sources familiar with the case confirm that after TCG Chase Tower acquired the note on the building, it renegotiated the terms of Florida Street Holdings’ mortgage on the 48-year-old building.
Attorneys for TCG Chase Tower and Florida Street Holdings did not return multiple calls seeking comment.
Though TCG Chase Tower presumably acquired the mortgage on the building for far less than the $22 million U.S. Bank was owed, the deal was likely the best possible outcome for all parties involved. The bank recouped some of its loan and didn’t get stuck with the property. Florida Street Holdings got to keep its building under more favorable terms, and TCG Chase Tower made what it clearly considers to be a good investment.
Whether that is the case remains to be seen. The 300,000-square foot office building is one of downtown’s iconic structures. But at just 76% occupancy, its vacancy rates are the highest of all class A office buildings in the downtown submarket. The building is also in need of renovation, and in March, one if its largest tenants—The Camelot Club—closed its doors, vacating nearly 20% of the building.
The foreclosure suit began in April, when U.S. Bank sued Florida Street Holdings for failing to pay its note since October 2015. Dick ruled in the bank’s favor and ordered the seizure and sale of the building, but Florida Street Holdings appealed to the U.S. Fifth Circuit Court of Appeals, and separately filed documents in district court asking Dick to throw out her order as well as the bank’s complaint.
Complicating matters was a separate lawsuit that predated the foreclosure suit. That case concerned escrow payments for maintenance and upkeep that Florida Street Holdings was required to make to U.S Bank under the terms of its loan agreement.
Those related legal matters have also been settled and dismissed.
—Stephanie Riegel
