October 21, 2009|By Hanah Cho | Hanah Cho,hanah.cho@baltsun.com
The sale of Baltimore developer Edwin F. Hale Sr.'s 1st Mariner Tower was canceled after the building's lender withdrew its foreclosure action Tuesday.
No reason was given in the notice of voluntary dismissal filed by Washington-based attorney Jerald S. Cohn, who represented the substitute trustee for Paris-based bank Natixis SA. It was not clear whether the bank plans to move ahead on the foreclosure of the 17-story Canton Crossing office building, a process that began last month after it said Hale defaulted on an $84 million loan. The auction had been scheduled for today.
Still, the bank's move left several possible scenarios, including Natixis refiling the foreclosure action or other investors stepping in to buy the tower. One possible buyer is Columbia office developer Corporate Office Properties Trust, which holds a secondary loan worth roughly $25 million on Hale's tower.
Alex Gordon IV, an attorney in Easton and author of "Gordon on Maryland Foreclosures," said the foreclosure case could have been dismissed for several reasons, including the French bank realizing that it had not complied with a new state foreclosure law requiring more notification.
It also would not be surprising if a second-lien holder like COPT took over the tower's debt, Gordon said.
"You run the risk of the property being sold by the first lender, free and clear of your lien, and your lien being wiped out," he said. "So if you got the resources at hand ... you would buy it so that you are back in control of the collateral. It would be a big investment."
COPT made a loan to Hale in August 2008, according to the company's annual report. In the case of a default for either loan on the tower, COPT said it could purchase the first mortgage to protect its investment. Randall M. Griffin, COPT president and CEO, was unavailable for comment Tuesday.
When asked in an interview last month whether COPT was interested in buying the tower, Griffin said, "It's a great property and we'll have to see how things unfold."
At issue is a Natixis loan that matured in August. The bank declined to renew it, even though Hale has said he was current on the payments.
According to court documents, Natixis said the outstanding balance of the loan was $76.6 million as of Sept. 9 and that interest would continue to accrue.
Last week, Hale's attorney filed a motion to delay the sale and dismiss the case altogether, arguing that the lender did not follow several notification requirements under a new state law that provides more protection for homeowners facing foreclosure. Although the office building houses tenants such as 1st Mariner Bank, CareFirst and Comcast, Hale lives in the penthouse as the tower's only resident.
Cohn and Michael G. Gallerizzo, a Baltimore lawyer representing Hale, did not return messages. A call to Hale was not returned Tuesday.
