Unable to get acceptable prices in a poor commercial real estate market, two financial institutions have bought back properties at auction after foreclosing on them.
Security Office Park, a group of three Woodlawn office buildings containing 121,661 square feet of office space, was bought by Maryland National Bank after bidders failed to raise the stakes above $4.7 million. The partnership that owned the buildings filed for bankruptcy last August and owed Maryland National $9.87 million.
The bank wound up buying the office park for $4.9 million. Its wholly owned subsidiary, South Charles Realty Corp., will manage the property.
Although the real estate market is in bad shape, it's not bad enough to "take pennies on the dollar," Brad Kotz, asset manager for South Charles Realty, said after the auction.
"People expect to buy property at an auction at a deep discount but we were not willing to go that deep," he declared.
At a downtown auction, the Hotel Junker, a seven-story, 22,000-square-foot office building at 20-22 E. Fayette St., was bought by Home Federal Savings Bank of Hagerstown.
The thrift, which had foreclosed on the building, made the high bid of $1.125 million. There was only one other bidder, according to Larry A. Makowski of Express Auction Services Inc.
Robert J. Carson, a lawyer representing Home Federal, said the savings and loan does not have any immediate plans for the building. According to court documents, the developers owed Home Federal $2.5 million, plus interest, Carson said.
Several years ago, the building was renovated into office space by a group headed by Martin P. Azola, who recently filed for protection from creditors under Chapter 7 of the Federal Bankruptcy Act.
The Hotel Junker, which was a favorite of Baltimore reporters in ++ the early part of the century, was one of the first downtown buildings to be built after the 1904 fire that destroyed downtown Baltimore.
The Security Office Park was developed by a local group called Security Office Park Limited Partnership. In its bankruptcy petition, the partnership listed assets of $10 million and liabilities of $11.5 million.
Michael J. Schwarz, an attorney representing the Security Office partnership, said all claims against the partnership are virtually wiped out by the bank's foreclosure.
Maryland National got permission last month to foreclose on the property, consisting of three-story buildings at 7000, 7004 and 7008 Security Blvd., across from Hechinger Square and Security Square Mall.
The loan for Security Office Park was originally made in 1986 for $10.1 by Equitable Bank N.A., which merged with with MNC Financial Inc., the parent company of Maryland National.
The auction drew about a dozen people, but there were just three serious bidders, according to R. Andrew Stafford, senior vice president of Atlantic Auctions.
Despite the low bids, Kotz said, the interest was strong and the bank will continue to market the property, which is 82 percent leased.