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Developer of Binford Medical Complex files for Chapter 11

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The developer of an unfinished medical office complex on Binford Boulevard has filed for Chapter 11 bankruptcy protection in hopes it can retain control of the property and resume construction later this year, four years after the principal lender went bankrupt and sent the project into limbo.

Binford Medical Developers LLC filed for Chapter 11 bankruptcy reorganization early this month to prevent a forced sale of the 17-acre property at 65th Street and Binford Boulevard to collect unpaid property taxes. The move buys time for the developer to close on a settlement with its original construction lender and a new loan to finish the first building in the so-called Binford Medical Complex, company principal Ken Schmidt said.

The first building in the $32-million, five-building complex was about 95 percent complete when lender USA Capital filed for bankruptcy in April 2006. By that point, USA Capital had provided only $7.4 million of an $8.5 million loan it had promised.

Schmidt hasn't paid interest on the loan since 2006, as he awaited a settlement. The biggest hurdle to reaching terms: USA Capital was funded by thousands of small investors, and 92 of them are listed on the title for the Binford Medical property.

The developer has landed a new loan that will set aside $1 million to finish the first building, along with funds to settle with the 92 investors in the original loan. Schmidt said the investors agreed to take less than they're owed, but he declined to provide details.

Schmidt hopes to reach a separate settlement with county officials over an unpaid $129,000 tax bill. He plans to dispute the assessed property value, arguing the property has sat mostly vacant.

The 47,000-square-foot existing building has only two tenants: a 4,300-square-foot urgent care center that continues to pay rent but has not been open for business, and Seward Sales Corp., which occupies about 2,200 square feet.

Schmidt, who has developed 22 smaller office and industrial buildings in the area, said he has leases lined up for 75 percent of the building once it is complete. He also has a commitment from one tenant to take an entire new building in the complex.

Future buildings in the complex would be built as soon as financing and demand come together. Medical office has been a strong sector of commercial real estate, and the project should benefit from its location on a major corridor not far from Community North.

"I buried my own money ($6 million) in this project," he said. "The only way I can get my money back or a portion back is to build out, lease up and get the whole project completed."

The Chapter 11 case was filed in the U.S. Bankruptcy Court for the Southern District of Indiana on Oct. 6. Binford Medical Developers lists assets of less than $50,000 against liabilities between $1 million and $10 million.

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  • 75%? Really?
    I doubt that there is sincere tenant interest for 35,000 SF in this building. If that was the case, it would already be filled. If the existing urgent care facility ceases operations, clearly there is a problem with the location or demographics. Instead of chasing Dr's as tenants, maybe they should be chasing a mortuary tenant.

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  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

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