Cathedral Court Apts. sold for $750,000 Buyer's attorney says leases will be honored

January 24, 1996|By Edward Gunts | Edward Gunts,SUN STAFF

Cathedral Court Apartments, a $4.5 million residential complex whose opening in 1988 symbolized private efforts to rejuvenate the Mount Vernon historic district, was sold at auction yesterday for $750,000 after its original developers defaulted on their mortgage.

Colony MACO Partners, a Delaware-based corporation, submitted the high bid for the five-story apartment building, which was created inside the shell of the old Albion Hotel at Cathedral and Read streets. An attorney for Colony said the sale has no immediate effect on tenants because all leases will be honored.

Colony is an investment group that held the mortgage to the property and had initiated foreclosure proceedings against the original developers, Cathedral Court Limited Partnership.

According to documents filed in Baltimore Circuit Court, Cathedral Court Limited Partnership owed Colony $8,573,130.80 as of Monday, in principal, interest, late charges and other fees.

Named after a John Milton poem, the Albion was designed and built by architect Bruce Price, father of etiquette expert Emily Post, and once was one of the city's premier addresses.

It was operated as a third-rate hotel before its conversion to 32 apartments with street-level retail space. The property also includes a former auto showroom at 116 to 122 W. Read St. that houses space for several food merchants.

When it opened, Cathedral Court was one the most ambitious renovation projects in the Mount Vernon area during the 1980s. Its developers took advantage of tax credits available to stimulate preservation of historic properties. Changes in the tax laws after 1986 took away the incentive for developers to invest in historic buildings and made many of the historic conversions unprofitable.

Cathedral Court Limited Partnership was declared in default of its mortgage shortly after the building opened. The apartments have been managed since mid-1994 by a court-appointed receiver, Bozzuto Management Co. of Greenbelt.

According to court documents, Colony's business address is 1999 Avenue of the Stars in Los Angeles. Colony attorney Regina Kunkle said Bozzuto will manage the property at least until the sale is ratified by the Circuit Court, which will take about 30 days. During the ratification period, she said, Colony will evaluate the condition of the property and decide whether to sell it or hold onto it.

According to a leasing chart distributed at the auction yesterday, many of the apartments were leased through early 1997. Monthly rents range from $465 to $910.

Colony acquired the Cathedral Court mortgage from Resolution Trust Corp. in 1994 as part of a package of mortgages held by thrifts that had become insolvent. The original loan of $4.5 million was made in 1985 by John Hanson Savings Bank, which was placed in receivership in 1991.

The only other bidder was Konstantinos Alexakis, representative of a Virginia-based development company. He offered $120,000.

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