A French bank has begun foreclosure proceedings on 1st Mariner Tower at Canton Crossing as the recession and housing slump spread deeper from Baltimore banker and developer Edwin F. Hale Sr.'s banking business to his commercial real estate activities.
Paris-based Natixis SA informed Hale on Friday that the bank's commercial real estate lending arm in New York has scheduled an auction for the 17-story building and surrounding land for Oct. 21 after the default of an $84 million loan, according to a notice of sale.
In an interview Tuesday, Hale said he was considering several measures to resolve the problem, including trying to sell the building that opened three years ago.
"I'm going to do what I have to do here," Hale said. "I'm going to list the building for sale. I'm going to continue to talk to people about refinancing it, and just look at all the alternatives."
The foreclosure is the latest bad news for Hale, whose 1st Mariner Bank has been in distress for the past two years and now is operating under more intense federal scrutiny.
The bank revealed Monday that federal and state regulators have ordered it to devise a plan to improve its capital and deal with problem loans. The "cease-and-desist" order sets deadlines and benchmarks on capital levels for the bank, which has been struggling to raise cash.
"On top of this cease-and-desist, [the foreclosure] is not going to be good," Hale said.
It also raises questions about Hale's plans to expand the mixed-use Canton Crossing development built around the signature office tower off Boston Street in Canton. Owings Mills-based retail developer Greenberg Gibbons, which is partnering with Hale Properties LLC, said the tower's foreclosure does not affect plans for a major shopping center, which is moving ahead.
At issue in the foreclosure is the $84 million loan that matured in August and Natixis has decided not to renew, Hale said.
Although Hale said he's current on the loan, the bank "found I'm in default in a couple of provisions.
"They're sticking it to me. I don't know how much more they can," Hale said.
A message to Natixis Real Estate Capital was not returned Tuesday.
Complicating matters are costs related to a project with Constellation Energy Group to sell power to Canton Crossing tenants. Natixis told Hale that he's paying too much in financing costs for the project and needs to "get this situation squared away," Hale said.
