Premier Properties USA Inc. has eliminated about half its headquarters staff--more than 40 employees--as banks seize several
of its properties and CEO Christopher P. White faces a barrage of new lawsuits alleging unpaid bills, defaulted loans, illegally
redirected rent payments and check fraud.
Court-appointed receivers have taken control of several Premier properties in Indiana and Ohio, including Plainfield Crossing and Plainfield Commons. And lenders on other properties have begun proceedings that could have the same result.
In a March 31 lawsuit, The National Bank of Indianapolis accused White of check fraud after a bounced check led to an overdraft of $382,500 in his business account. The bank also declared White in default on a $465,000 home-equity line of credit and a $19.5 million personal line of credit secured by CDs worth $12 million.
And Premair Inc., one of several companies White runs under the umbrella Reffco II LP, filed bankruptcy late last month as GE Capital Corp. sought to repossess a Boeing 737. Premair is listed as the plane's owner.
White confirmed the March 31 layoffs at Premier, but he declined repeated requests to talk with IBJ about the other allegations. White, 50, is searching for financial help to save his company.
"I don't have a moment as I am in constant negotiations," he wrote in an e-mail.
In a December interview, White said the company employed 80 at its Indianapolis headquarters and a total of 300.
Survival in doubt
The outlook is grim for the company that built the Metropolis outdoor mall in Plainfield and proposed a $750 million retail, office and residential giant called Venu in Indianapolis. The 15-year-old firm built its name on outsize deals with little margin for error but has sputtered since credit markets tightened and easy credit disappeared.
Judges in Indiana and Ohio have appointed receivers to manage several of Premier's properties that have fallen into foreclosure. A receiver essentially protects the value of a property, collecting rents and paying expenses--usually until the property can be sold.
Los Angeles-based CB Richard Ellis has been appointed receiver for Plainfield Crossing, a 92,000-square-foot West Washington Street strip center anchored by Value City. Cleveland-based National City Corp. foreclosed on the property to recover about $9 million.
CBRE also is acting as receiver for Bridgewater Falls, a 635,000-square-foot lifestyle center in Ohio. Charlotte, N.C.-based Wachovia Bank foreclosed on an $80 million loan Premier used to build the center, which is anchored by Target and J.C. Penney. The bank also has foreclosed on a vacant former Wal-Mart store in front of Premier's Metropolis mall in Plainfield.
Locally based Sitehawk Retail Real Estate is handling receivership duties for Plainfield Commons, which includes a strip center with Dollar Tree and Family Christian Bookstore and undeveloped land near Metropolis. Creditors on that site include Columbus, Ohio-based Huntington Bancshares Inc.
Before the credit troubles began, developers had an array of options to refinance or restructure debt, but many of those options have disappeared, said Larry Davis, a principal with Sitehawk.
"The ability to go out and seek new pieces of funding is more difficult," he said.
Venu on life support
Premier grabbed the spotlight last year when it unveiled plans for a giant mixed-use project at the southwest corner of East 86th Street and Keystone Avenue, along the city's strongest retail corridor. But the project stalled as unpaid bills piled up.
Now, one of the lenders that financed Premier's purchase of two office buildings central to the project is suing Premier for violating its agreement by redirecting tenant payments. The lawsuit, filed March 28 by a subsidiary of New York-based Arbor Realty Trust Inc., asks for a temporary restraining order and threatens foreclosure if Premier does not comply.
When Premier bought the Woodfield Crossing office buildings last June, it took out a $41.4 million first mortgage and a $5 million mezzanine loan, both from Column Financial Inc., a division of Credit Suisse. Column later assigned the mezzanine loan to Arbor and used Cleveland-based KeyCorp to service the primary loan.
The lawsuit includes a Premier invoice dated March 1, 2008, in which the company instructed a tenant to remit payment to an address in Carol Stream, Ill., instead of a "lock box" account at The National Bank of Indianapolis as required in the loan agreement. The redirection of rents means the money isn't being used to pay down the loans, the complaint said.
Premier also owes millions for the buildout of its new headquarters in Woodfield Crossing. Locally based Charles C. Brandt Construction Co. has filed a lien for $2.2 million, and locally based Barth Electric is seeking $172,000. California-based The Jerde Partnership, the lead architectural designer on Venu, has filed a lien for $437,000. And locally based Schneider Corp. has filed liens for about $70,000 in unpaid surveying work.
The most recent lawsuit, filed April 1, is no joke to Dayton, Ohio-based Kramer Graphics Inc. The firm printed hundreds of banners, decals and leasing signs for Premier's properties all over the country, including Metropolis and Woodfield Crossing. But Premier apparently never paid. Kramer is suing to recover about $169,000.
Check fraud allegation
In the National Bank of Indianapolis lawsuit, the bank alleges White "wantonly, willfully and fraudulently" deposited a bad check for $500,000 on Jan. 30, 2008, which led to the overdraft. The check, signed by White, was from an entity called HPT LLC that is not registered in Indiana.
The bank is seeking actual damages plus $1.5 million for what it describes as "criminal mischief." After the incident, the bank demanded immediate payment of a maxed-out $465,000 home-equity line of credit White opened on Dec. 11. After White failed to pay, the bank declared the account in default.
Another December 2007 agreement with NBI extended White credit up to $19.5 million, and that loan matured in January without payment. The bank collected $12 million by cashing in two CDs White had used as collateral, court papers say. White still owes about $147,000, the bulk of which stems from fees from cashing out the CDs before maturity.
In filing the suit, NBI joins a long line of creditors chasing Premier and White: Contractors have filed more than $3.5 million in liens against Premier's retail properties in Plainfield; the contractor who renovated his $2.2 million mansion on Lake Clearwater is suing to recover more than $600,000; and the state of Indiana is trying to recover $375,000 in sales taxes on one of White's airplanes, a Cesna 750 Ctation X.
Fly by night?
Two more signatures of the extravagant lifestyle White led over the last few years--his Boeing 737 and Gulfstream IV airplanes--also have been a big source of recent troubles.
Oklahoma-based Bizjet International Sales and Support Inc. sued in federal court on Feb. 5 over work it performed on the 737. Bizjet says White wrote it a check for $299,000 to pay for the work. But the check bounced.
Locally based Indianapolis Jet Center Inc. filed a lien against the 737 on Feb. 4, claiming White never paid for $2.45 million in repairs. And in another suit, the CEO of Brownsburg-based Premier Jet Aviation Inc., Mark Schweibold, says White repeatedly has refused to pay back $2.6 million he owes. The 737 is held by Perpetual Motion Inc., another company owned by White.
Creditors also are pursuing White's other plane, a Gulfstream IV. White agreed in March 2007 to lease the plane, borrowing from GE Capital Corp. In a lawsuit filed March 24, GE says White's company Premair Inc. stopped making payments and has refused to surrender the aircraft.
In its suit, GE demands the sheriff seize the plane and suggests White might flee with the aircraft.
"Faced with a substantial payment default approaching $20 million and the potential disappearance of a highly mobile and very expensive aircraft, GE Capital seeks equitable relief from this court," the filing states.
A decision on that case is on hold because Premair Inc. filed for Chapter 11 bankruptcy the same day.