Baltimore developer Edwin F. Hale Sr. will vacate his penthouse at 1st Mariner Tower at the end of the year after selling the Canton Crossing office building that had been under foreclosure proceedings to Columbia-based Corporate Office Properties Trust.
Randall M. Griffin, COPT president and CEO, said in an interview Wednesday that the office developer acquired Hale's 17-story tower, a parking lot, a utility distribution center and land slated for a large waterfront development of offices, shops, a hotel and a marina in a deal that closed Tuesday. Financial terms are expected to be released during a conference call today.
Griffin said the development rights that COPT now owns are separate from Hale's partnership with Owings Mills-based retail developer Greenberg Gibbons to develop a major shopping center that would be anchored by Target, grocer Harris Teeter and a third large retailer.
The sale of Hale's tower represents the first large office building transaction in Baltimore this year. Among the recent big office towers to sell was the Sun Trust Bank Building, a 25-story office tower at 20 E. Baltimore St. in downtown Baltimore, which sold for $62.75 million in June 2007.
COPT's acquisition of the 1st Mariner Tower "reflects what we foresee happening in the market for 2010 and 2011, where you have a distress situation forcing a transaction," said Bo Cashman, a senior vice president in Investment Properties Capital Markets Group at CB Richard Ellis in Baltimore.
The Canton Crossing building and adjacent land were slated for auction last week before the Paris-based lender Natixis SA withdrew its foreclosure action the day before the scheduled sale. Hale had defaulted on an $84 million loan on the office tower in September, one of the latest setbacks for the developer and banker.
Hale was unsuccessful in refinancing the loan as the commercial lending market dried up amid the recession. And Hale's 1st Mariner Bank, which has its headquarters in the tower, is operating under intense federal scrutiny to improve its capital and deal with problem real estate loans. Hale did not return a phone call Wednesday seeking comment. It is unclear what the sale means for the bank.
COPT, which held a secondary loan worth roughly $25 million on Hale's tower, purchased the mortgage from Natixis last week and finalized negotiations with other parties, including Constellation Energy Group, which owned the utility distribution plant, Griffin said.
