Downtown office sold through court action
Legal firm buys mortgage-foreclosed 169-year-old structure.
Kent County 17th Circuit Court Judge Christopher Yates recently approved the sale of a unique, historic and insolvent downtown office address.
Keller & Almassian PLC, a law firm that specializes in bankruptcy and business litigation, bought the Pike House at 230 E. Fulton St. in a bankruptcy sale. The firm, which currently has its office at 2810 East Beltline Ave., was the highest bidder for the two-story building at slightly more than $1 million, plus other unspecified costs that are not part of the court order.
Amicus Management of Grand Rapids, a real estate management firm and turnaround consultant, was named by the court in July as the receiver on behalf of an Indiana-based lender that held the building’s mortgage. Amicus Management founder and President Dan Yeomans said the sale took less time to complete than initially thought.
“It went pretty quickly. We put out a really strong marketing initiative and found a number of buyers. It came down to three serious parties, and two had written offers,” he said.
The court order gave the previous owner, Pike House LLC, 90 days to purchase the property from the mortgage holder, which is highly unlikely to happen. However, Yeomans felt having a redemption period attached to the sale may have limited the number of interested parties who would bid on the building because not everyone would want to go through the process and then have the property redeemed by the owner.
“I was left with the task of finding a buyer who was willing to do their due diligence, to look at the property, invest their time and effort, try to figure out what they needed to do, what they were going to offer, what type of capital improvements they might want to make, and then submit that offer to the court — and then they wait for three months,” said Yeomans.
“Some people are just not willing to put in that kind of effort and then possibly not obtain the property because the owner redeems it,” he added. “Out of about 1,000 properties, I’ve probably seen two get redeemed.”
Although the redemption period is in the court order, Yeomans said Keller & Almassian reached an agreement with Pike House LLC and it waived the redemption period, a move that allowed the closing to be completed. Without the waiver, Keller & Almassian wouldn’t have been able to find financing for the purchase or would have had to wait until the period expired to close on the transaction.
A clause in the court order stipulated that if Pike House LLC had redeemed the building, it had to pay the law firm its due diligence cost, related attorney charges, and what the court called a “break-up” fee of $50,000.
As it now stands, Keller & Almassian gets the building free and clear of all liens.
Pike House LLC consists of former officers of Design Plus, which merged with Progressive AE last year. Design Plus bought the Pike House for a reported $950,000 in 2006 through a mortgage issued by Irwin Bank and Trust. First Financial Bank of Terre Haute, Ind., became the creditor when it bought the assets of Irwin Bank in September 2009. The bankruptcy filing listed Pike House LLC as owing First Financial nearly $2.2 million.
An issue still to be settled, and not covered in the court order, is how Pike House LLC and First Financial will come to terms on the difference between the sale price and the amount owed on the mortgage. That matter isn’t part of the receivership sale. “This does not involve the buyer at all,” said Yeomans.
The Pike House has nearly 25,000 square feet of space and 60 parking spaces on nearly an acre of land. The building, which was built in 1844, was home to the Grand Rapids Museum for 50 years and is listed on the National Register of Historic Places.
The structure has an Obsolete Property Rehabilitation Exemption in place until 2018 that freezes the building’s taxable value at $140,374 for the exempted period. The exemption was awarded in 2007. It applies only to the Pike House and not to the property the building occupies.