Cigna Corp. assumed control of a majority of the Point Breeze Business Center in Southeast Baltimore yesterday, submitting a lone bid of $25.2 million at an auction on the 130-acre property.
The insurance company's bid caps one of the largest commercial real estate foreclosures in Baltimore in the past decade, a fight sparked by a loan default by a partnership led by AEW Capital Management Inc., a Boston pension fund consultant.
With the auction, Cigna takes possession of seven buildings totaling 1.97 million square feet of office and warehouse space, adjacent to the General Motors Corp.'s minivan plant on Broening Highway.
"Cigna, I assume, now has two main tasks," said R. Michael Creaney, chief operating officer of Creaney & Smith Properties Inc., a former Point Breeze owner and property manager. "They have to provide some leasing, and they have to provide a package to make the property buyable, since typically they prefer to be a lender rather than an owner."
AEW halted mortgage payments on its $36.3 million loan to Cigna in December, after the company and the insurer failed to refinance the debt, which dates to August 1989 and matured last summer.
The $10 billion Boston pension fund adviser also failed to pay $1.06 million in property taxes due on Point Breeze, according to court records.
Almost certainly, Cigna's first task will be to increase the occupancy at Point Breeze, a former Western Electric Co. plant converted to a business park in 1985.
Since AEW took control of Point Breeze in September 1995, by swapping partnership interests with Creaney & Smith, occupancy has slipped from 90 percent to 64 percent, Creaney said.
The occupancy dip occurred because AEW declined to renew leases with major tenants such as Toscany Imports, Bob's Transport and others.
Both AEW, Cigna and their respective attorneys declined to comment on either the Point Breeze auction or the park's future. Despite the auction, AEW will continue to own a portion of Point Breeze not covered by Cigna's mortgage.
Pub Date: 2/27/97