The owners of Regions Tower are facing a foreclosure suit after an alleged failure to pay off nearly $75 million of loans on the landmark property in downtown Indianapolis.
A lawsuit filed Feb. 2 in Marion County Superior Court claims NG 211 N. Pennsylvania St LLC and Regions Tower MF LLC missed an Oct. 1, 2023, deadline to pay off the outstanding balance on the 36-story tower, putting the property at significant risk of foreclosure.
The suit was filed by Delaware-based Wilmington Trust National Association, which is acting as a trustee for Cleveland firm KeyBank, the debt servicer for the office building at 211 N. Pennsylvania St. The loans themselves are owned by Morgan Stanley Mortgage Capital Holdings LLC.
In the filing, Wilmington asks that the full amount of the outstanding debt be repaid immediately—along with accruing interest and legal fees—or the property be foreclosed upon. Foreclosure would send the deed to the Marion County Sheriff’s Office, which would put the property up for bid at auction, with Wilmington having an option of bidding to take control of the site.
In addition to its foreclosure demand, Wilmington Trust requested the appointment of Matthew Mason with the Detroit office of Dallas-based Riveron RTS LLC as receiver for the 685,000-square-foot property. Mason did not immediately return an email requesting comment Monday night.
Wilmington Trust also asked that the Indianapolis office of Chicago-based brokerage JLL retains its role as manager of the property.
In appointing a receiver, Wilmington and KeyBank would also have an option of potentially securing a new buyer, or seeking a firm to acquire the debt from Morgan Stanley directly.
Regions Tower, also known as One Indiana Square, was sold in 2014 to New York City-based The Nightingale Group LLC for $65 million after an extensive renovation was completed in 2012.
Regions Tower is at least the second major downtown office building to face foreclosure in the last six months, after the owner of Circle Tower on Monument Circle was sued in August over alleged failure to repay debt.
The lawsuits come as downtown faces growing office occupancy problems, with the Indianapolis office of Cushman & Wakefield reporting a vacancy rate of 22.2% at the end of 2023.
Regions Tower is about 75% occupied, according to data from the building’s website.
The tower was developed in 1970 as the headquarters of Indiana National Bank and is now home to the Indiana operations of Birmingham, Alabama-based Regions Financial Corp. It’s also home to Flaherty & Collins Properties, Krieg DeVault LLP and Taft Stettinius and Hollister LLP.
Designed by architect Thomas E. Stanley, the 504-foot tower was the tallest building in the state until 1982, when the 533-foot AUL Tower (now OneAmerica Tower) opened. Both buildings were surpassed by the 701-foot Bank One Tower (now Salesforce Tower) in 1990.
The building has sustained multiple incidents of weather damage since its completion. A new facade was installed in 2006 after severe storms ripped through downtown.
The property includes a 992-space parking garage, as well as numerous amenities that were developed or enhanced during a multi-million-dollar interior renovation in 2015, including a full-service cafeteria, a fitness facility, a conference center, a salon and an entertainment space that is often rented for weddings and other private events.