Chapman's firm loses bid to renegotiate office rent

eChapman.com based in World Trade Center

October 03, 2002|By Michael Dresser and William Patalon III | Michael Dresser and William Patalon III,SUN STAFF

The Maryland Port Administration told Nathan A. Chapman Jr. yesterday that it will not renegotiate its World Trade Center lease agreement with his beleaguered investment firm, eChapman.com.

Chapman, the company's founder and chief executive, asked the state about three months ago to cut the rent on his offices in the 30-story building, where the firm occupies the entire 28th floor. Determined to cut costs, Chapman had threatened to move out if the port administration refused his request.

Jack P. Cahalan, a spokesman for the Maryland Department of Transportation, says the state will hold the company to the terms of the agreement it signed in 2000. Chapman has had offices in the building since 1993.

"If [Chapman] feels the need to leave the World Trade Center, he would still be responsible for the remaining three years of the agreement," Cahalan said.

Cahalan declined to disclose eChapman's lease rates and wouldn't compare them with those of other tenants. Neither would he describe what changes Chapman was seeking.

The spokesman said eChapman.com's rent payments are up to date and have been for years.

Chapman could not be reached for comment.

The prestigious offices with a panoramic view of the Inner Harbor were a symbol of Chapman's ambition as he built his company and its predecessors into one of the best-known minority-owned financial services firms in the country.

During the past year, however, it has become apparent that the address is beyond the means of the troubled firm. The company suffered a significant blow in January when it was fired by the state pension system, one of its largest customers, as a manager of hundreds of millions in retirement funds.

The Securities and Exchange Commission, U.S. attorney, Maryland attorney general and state securities commissioner are all investigating the use of pension funds to purchase stock in eChapman.com.

At eChapman.com's annual stockholders meeting in June, Chapman articulated a two-pronged turnaround strategy: Cut costs and boost revenue growth. Chapman said he would seek to renegotiate lease rates at all of the company's locations, including the World Trade Center headquarters at 401 E. Pratt St.

He said then that he was looking at three locations in Howard County, where his rental cost would drop by at least two-thirds.

Cahalan said yesterday that the state considers requests for modifications of leases and decides each case on the merits. In this case, James J. White, executive director of the port administration, decided "it would not be in the best interest of the Maryland Port Administration to renegotiate," Cahalan said.

Any decision to cut eChapman.com's rates would have been contentious because Chapman is a friend and political supporter of Gov. Parris N. Glendening, who named the 45-year-old businessman to the state university system's Board of Regents.

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