Point Breeze center to be auctioned Cigna foreclosing on 130-acre business park in S. Baltimore

Loan in default

Creaney & Smith, AEW are debtors on property

February 20, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Cigna Corp., in one of the city's largest commercial real estate foreclosures of the past decade, intends to auction the Point Breeze Business Center next week.

The Connecticut-based life insurer's action involving Point Breeze, a 130-acre business park in South Baltimore, stems from a default on a $36.3 million loan and failure to pay $1.06 million in property taxes, according to city court records.

The loan, owed by a partnership led by Boston pension fund adviser AEW Capital Management Inc. and involving local developer Creaney & Smith Properties Inc., dates to August 1989 and came due last summer, according to city records.

AEW stopped paying the mortgage to Cigna in December, after negotiations to refinance Point Breeze's debt reached a standstill, according to court documents and sources.

AEW had sought a lower interest rate on its loan, in part because Point Breeze's value has declined over the past eight years. Most recently, the state reduced Point Breeze's property assessment to $40 million from $52 million.

The business park is roughly 90 percent occupied by such tenants as the Maryland Department of the Environment, the state's Port Administration, Fila Sports Inc., Titan Steel Corp. and the Baltimore Freeport Centre.

Cigna had asked AEW to pay down a portion of the loan and establish financial reserves during the negotiations.

Since then, AEW has canceled Creaney & Smith's contract to manage Point Breeze, which is adjacent to General Motors Corp.'s mammoth mini-van plant on Broening Highway, and the Baltimore City Circuit Court has appointed the Trammell Crow Co. as a receiver to manage the project.

"We're treading water at this point," said R. Michael Creaney, Creaney & Smith's chief operating officer. "Although both sides appear still to be talking, no one is saying what is going to happen."

Unless a resolution is adopted, seven office and warehouse buildings totaling 1.97 million square feet are scheduled to be auctioned Wednesday.

As in most foreclosure auctions, though, AEW, a pension fund consultant with roughly $10 billion in assets, could stave off the -- auction by filing for bankruptcy protection on behalf of Point Breeze.

But if the auction goes through, it is likely Cigna will assume control of Point Breeze, a former Western Electric Co. facility that was redeveloped beginning in 1985, because of its large investment.

As of Jan. 15, AEW's partnership owed $36.78 million in principal, accrued interest and penalties, according to court documents. Even with foreclosure, AEW will still own at least part of Point Breeze -- including 185,000 square feet of space and a power plant -- because portions of the business park were not covered by Cigna's loan.

Several high-profile city properties have undergone foreclosure, including the 23-story One Charles Center office tower, Baltimore Travel Plaza, a 28-story skyscraper at 6 St. Paul St., various condominium projects and the 23-story Redwood Tower office building, at 217 E. Redwood St.

Pub Date: 2/20/97

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