The lender to the owner of the historic Century Building in downtown Indianapolis is seeking to foreclose on the property, claiming it’s owed $10.5 million on a loan default.
Minneapolis-based U.S. Bank filed Feb. 8 in Marion Superior Court to foreclose on the seven-story building at 36 S. Pennsylvania St. The owner is Century Building Investment Group LLC, a unit of California-based Blue Real Estate.
The building, built in 1901, is the corporate home of Steak n Shake, ExactTarget and Denison Parking.
Blue Real Estate, which entered the Indianapolis market as an investor in 2006, lost most of its local holdings last year after lenders took control of several properties.
In September, Blue surrendered its 360,000-square-foot, seven-building portfolio in Park 100 after defaulting on a $17.5 million loan affecting six of the seven buildings. Blue bought the collection of mostly office/flex space from Duke Realty Corp. in 2007 as part of a move into Indianapolis that began with the purchase of four Castle Creek office buildings in 2006.
Along the way, it scooped up a 17-building, 800,000-square-foot portfolio in Park Fletcher and acquired the Century Building. By late 2008, family-owned Blue controlled 1.6 million square feet of real estate in the Indianapolis area valued at about $120 million.
But, in early 2011, the Castle Creek buildings and the Park Fletcher portfolio came under the control of firms working on behalf of the lenders that held the debt on the properties.
U.S. Bank claims in its Century Building foreclosure suit that Blue received a loan in December 2006 from original lender Countrywide Commercial Real Estate Finance Inc. in the amount of $8.5 million.
U.S. Bank assumed the loan in June 2008, and alleges in its suit that Blue defaulted on the loan when its started missing payments in July 2011.
The unpaid principal on the mortgage still is about $8.5 million, or nearly the total amount of the original loan. But U.S. Bank is seeking $10.5 million, including interest charges and payment penalties.
U.S. Bank is requesting that the court appoint a receiver to manage the property during foreclosure proceedings.
Indianapolis-based Summit Realty Group is the leasing agent for the Century Building. The firm is named as a defendant in U.S. Bank’s suit, but only because it “claims or may claim a right or interest in the real estate that is subordinate to plaintiff’s,” according to the complaint.
Phone calls from IBJ to both Summit and Blue Real Estate were not returned Wednesday morning.
The Century Building contains 115,426 square feet of rentable space, ranking it as the 22nd-largest office buiding in downtown Indianapolis, according to IBJ statistics.
The latest figures available show the building was 89-percent occupied at the end of 2010.
Rents range from $16 to $17.50 per square foot, which is at the low end of downtown lease rates.