The latest challenge to last month’s final judgment in the Perkins Rowe case—which gives Ohio-based lender KeyBank National Association the right to foreclose on the mixed-used development—brings to light new information about the performance of the mixed-use development while also raising interesting questions about the bank’s appraisal of the property.
In court documents filed late Monday—just hours after another set of objections were filed by ThornCo, one of the contractors that helped build Perkins Rowe—attorneys for developer Tommy Spinosa note that Perkins Rowe generated $13.55 million in net income from 2010 through the first six months of 2012, and go on to question why that income hasn’t been applied to Spinosa’s bank debt, which stands at some $200 million.
“In calendar year 2012 alone, Perkins Rowe is expected to generate $9.5 million in net income,” the court documents state. “Inconceivably, not a single penny has gone to reduce the indebtedness of the defendants, the actual owners of the property.”
Spinosa’s attorneys also suggest KeyBank’s recent appraisal of Perkins Rowe devalues the condominiums in the development. Condo owners paid approximately $306 per square foot for units as recently as 2009, according to the court records. “But the Lenders now wish to value and sell the unsold 38 condominiums … for less than $100 per square foot ($99.67),” the filing says.
Spinosa’s attorneys go on to question the overall integrity of the appraisal and ask the court to permit them to submit their own appraisal. They question why KeyBank filed 24 pages of the appraisal under seal and suggest the bank is trying to keep financial information out of the public realm in order to buy back the development at auction for a deeply discounted price.
“Given there is no disclosure of any financial details and no marketing of the property, one can safely assume KeyBank intends on credit bidding and then seeking recovery of an unjustified deficiency,” the filing reads.
According to the terms of the judgment issued last month, Spinosa would be on the hook for that deficiency—to the tune of some $115 million.
Attorneys for both sides declined to comment on the case today. In its opposition yesterday, attorneys for ThornCo asked the court to slow the foreclosure proceedings on the grounds that a foreclosure sale would render moot their lien hearing in the case, scheduled for Dec. 3.
