Robert Skinner and George Broadbent were quite a team. Together, theyfounded the Skinner & Broadbent Co. in 1972 and
built it into a development power-house. By the time Skinner retired in 1987, the company had built nearly three dozen shopping
centers throughout the Midwest.
But those halcyon days are a distant memory for CEO George Broadbent, who’s spent much of this year battling lawsuits that charge he and the firm, now known as Broadbent Co., have defaulted on millions of dollars in loans.
The latest lawsuit carries some extra sting: It was filed in June by Skinner’s widow, Avis, who alleges Broadbent isn’t making the payments he committed to when he bought out Skinner’s real estate interests in 2006.
Broadbent negotiated the purchase that July, three months after Skinner’s death from cancer at age 73. Broadbent executed
a promissory note for $9.1 million, with interest accruing at 4.9 percent. He was supposed to make monthly payments of $95,840
until July 2016, when the remaining balance would be due.
But according to the lawsuit, Broadbent in January 2009 started making only partial monthly payments. The suit says Broadbent now is in default, boosting the interest rate to 12 percent and making the entire balance—$7.7 million—immediately due.
Broadbent, 69, and one of his attorneys did not return calls seeking comment.
The suit represents the latest in a long list of setbacks for George Broadbent and his company, which now are ensnared in about a half dozen lawsuits, most filed by financial institutions. Court papers charge he or the firm has defaulted on nearly $20 million in debts.
Broadbent Co. operates some of the most successful shopping centers in Indianapolis, but also has others with steep vacancies. The firm has run into trouble even with nearly full centers, such as North Willow Commons at West 86th Street and Ditch Road. Another, Greenwood Point on U.S. 31, landed in bankruptcy.
Real estate experts say the recession has walloped many strip center developers, boosting vacancy rates while simultaneously shrinking the appraised value of the real estate that serves as collateral on loans.
Avis Skinner wasn’t exactly quick to lower the boom on her husband’s former partner. According to court papers, her attorneys did not formally declare Broadbent in default until April 6—13 months after he started making smaller-than-required payments.
The notice gave Broadbent 10 days to catch up on payments, but he failed to do so, the lawsuit says.
There’s nothing like a little M&A activity to get the fees flowing.
Two local deals—Jeff Smulyan’s $90 million buyout of Emmis Communications Corp., and the city’s $1.9 billion sale of sewer and water utilities to Citizens Energy—are funneling millions of dollars to investment bankers, lawyers, accountants and other professionals at a time business is otherwise slow.
Take the utilities deal. Taking a lead role in representing the city was New York-based Citigroup Global Markets Inc., which would collect $5.3 million if the deal closes.
Law firms, whose pay doesn’t hinge on closing, also are in line for seven-figure paydays. Representing the city is Baker & Daniels, which is estimated to receive $2 million. It bills at hourly rates ranging from $140 for junior legal assistants to $620 for its most experienced partners.
The Emmis deal is tiny by comparison, but the fees aren’t. Wall Street lawyers represent Smulyan and his financial backer, New York-based Alden Global Capital. But Smulyan also enlisted the Indianapolis office of Taft Stettinius & Hollister, and Alden hired locally based Krieg DeVault.
JS Acquisition, the company Smulyan formed to make the purchase, expects to rack up legal fees and expenses of $5.5 million, according to an Emmis regulatory filing.
A committee of independent board members that analyzed Smulyan’s buyout offer hired its own counsel, locally based Barnes & Thornburg.
Upon closing, Smulyan’s New York-based investment banking firm, Moelis & Co., would collect $3.5 million. Morgan Stanley, adviser to the independent directors, is due “up to” $2 million, according to the filing.
Left with a mere $500,000 is the Virginia-based investment banking firm BIA Capital Partners. Smulyan hired the firm in October 2009 to advise him on strategy and fundraising, but it was unable to put together a deal that would have yielded a bigger payday.
Smulyan sent BIA to the sidelines in April, around the time Moelis entered the picture and paved the way for a key meeting with Alden officials.•