The planned sale of Harborplace to Baltimore developer P. David Bramble is in its final stages, with the struggling downtown property potentially selling for dramatically less than its assessed value.
Documents filed in the “motion to sell” by the court-appointed receiver with the Baltimore City Circuit Court signal that a private deal between the receiver, IVL Group, and Bramble’s MCB Real Estate, is imminent. Attorneys for IVL provided the documents to the Baltimore Business Journal on Monday.
The court papers provide the first glimpse into a proposed sale that was announced five months ago by Mayor Brandon Scott. IVL and MCB have held details of the negotiations close ever since. Bramble, principal of MCB Real Estate, declined to comment Tuesday morning.
A June appraisal of the Inner Harbor property by Cushman & Wakefield that runs more than 400 pages assessed the waterfront retail center at $45.8 million, according to the court documents. That figure is well below the $98.5 million paid in 2012 by former owner Ashkenazy Acquisition Corp. for Harborplace’s two pavilions. The motion to sell also listed Harborplace’s current liquidation value at $27.5 million, setting a potential going rate.
A motion by IVL Group, the New Jersey-based receiver, show Bramble could acquire Harborplace for something close to its liquidation value.But the final sales price that MCB will pay is yet to be determined, said Randall Hagen, the attorney for IVL Group who is based in Washington, D.C.
The price will also include an undisclosed balance of the secured debt on Harborplace held by Deutsche Bank Trust Co., the motion to sell said. It also states the price and appraisals gathered this year on Harborplace will be used as the basis to sell the development “as is, where is, with all faults.”
The court papers recorded in Circuit Court show that the sale of Harborplace may require a judge’s approval to end the receivership, said Patricia Jefferson, an attorney at Miles & Stockbridge, who is an expert on receivership cases but is not involved in the Harborplace case. She added that such documents are typically among the final legal filings in the receivership’s long process.
The papers also state that Bramble and MCB are an ideal candidate to acquire Harborplace and that recent pledges by the city and state to support the property’s turnaround are crucial because of its importance to downtown and the city’s economic base. The state has promised $67.5 million in state funds to the Waterfront Partnership, the nonprofit focused on promotion and upkeep of the waterfront promenade and neighborhoods surrounding the Inner Harbor.
Bramble, who has recently developed the Northwood Commons shopping center near Morgan State University and the Yard 56 center in Greektown, gets a shout out from the receiver in the motion to sell for his “leadership” and for being “a tireless contributor to efforts to improve Baltimore.” He recently broke ground on Madison Park North, a project that will bring residential and retail to a blighted block off North Avenue.
Once the deal is final, Bramble has said he plans to launch a series of community forums to gather public input on how best to reinvent Harborplace as a new gathering space with local vendors and a Baltimore-centric vibe. Bramble OK’d formation of MCB HP Baltimore LLC recently as the subsidiary to acquire the landmark, court records show.
Harborplace plunged into receivership in May 2019 after an emergency petition was filed by Deutsche Bank Trust Co. against AAC HP Realty LLC, an entity of Ashkenazy Acquisition Corp., the owner of Harborplace. Deutsche Bank is a trustee for UBS-Barclays Commercial Mortgage Trust, which had held the $76 million mortgage since Ashkenazy acquired Harborplace in 2012 for $98.5 million.
New York-based Ashkenazy was often criticized for its absentee ownership as the retail and restaurant hub was beset by an exodus of several high-profile anchor tenants and fell into disrepair. Remaining tenants today include the Cheesecake Factory, Hooter’s, Tir Na Nog and It’Sugar.
Read more about how Harborplace plunged into receivership in this Baltimore Business Journal investigation.
The 42-year-old development was built by visionary developer James Rouse as part of an ongoing downtown renaissance and for decades was celebrated as the city’s downtown heartbeat. It had once attracted large crowds of local, national and even international tourists to the Inner Harbor and landed details of the city’s rebirth on the cover of Time magazine.
The receivership capped the sad decline of Harborplace, detailed in a special report by the Baltimore Business Journal in December 2019. It also set off a debate over the future of the property, which was set into high gear in April with the announcement by Mayor Scott that Bramble and his prolific firm would be the new buyer.
The private deal will prevent a public auction of Harborplace because an auction had the potential to fall short of raising enough funds to pay off all liens, creditors and maintenance and vacancy issues, the receiver said in court documents.
“A private sale is the best outcome for the estate’s creditors and for the city,” the motion states. “The value of the property in its current condition, mostly vacant and suffering the effects of years of deferred maintenance, would not garner the public bids that would be necessary to pay off the existing loan, and the property is not generating sufficient income to cover its expenses including ground rent and taxes.”
The motion states that Harborplace has several “limitations” on its property footprint including ground leases, height restrictions for the Pratt Street and Light Street pavilions and city control of the waterfront promenades and surrounding green space that flank Harborplace. Some of the debate surrounding its future includes razing it and rebuilding a new retail center.
Another facet of the sale is detailed in the motion and relates to an ongoing lawsuit between the receiver and Bubba Gump Shrimp Co. over unpaid rent. That lawsuit will remain between IVL Group and the restaurant chain, and not MCB.