A prominent downtown property slated for a 46-story Ritz Carlton Nashville tower has been sold in a foreclosure auction after the developer allegedly stopped making payments to the bank.
R Squared Properties LLC of Washington bought the triangular-shaped 1.2-acre lot at 727 Korean Veterans Boulevard for $35 million on Thursday, according to the deed filed with Davidson County Register’s office.
The property was sold to the “highest bidder for cash” at Metro Nashville Courthouse on Thursday morning, the deed states. The sale price is the same amount the site sold for in March 2020 — $35 million.
R Squared officials did not immediately respond to requests about whether they will continue with development plans for the Ritz hotel.
Seller RC Nashville Development Partners, led by Timothy J. Morris, was sued for defaulting on a $10 million construction loan by Oakworth Capital Bank, the financiers for the original Ritz project. A U.S. Magistrate Judge said on April 1 that the defendants continue to fail to adequately respond to legal filings.
“RC Nashville has not filed an answer,” Judge Barbara D. Holmes wrote. “Although Morris filed a letter on behalf of himself and RC Nashville that could be construed as an answer to the complaint, RC Nashville can only appear in this case through a licensed attorney because it is a limited liability corporation.”
Ritz Carlton Nashville plans stalled shortly after they were announced
Plans announced in 2021 were to build a $585 million hotel and condominium tower filled with upscale design and amenities.
Morris told The Tennessean at the time that he was inspired by the success of Four Seasons Nashville.
“They came in as trailblazers,” Morris said. “They established the fact that people would pay the prices they’re paying for that type of luxuries and that brand and amenities.”
However, trouble surfaced in 2022 when construction was delayed due to financing challenges.
In October 2023, Oakworth Capital Bank filed a lawsuit in U.S. District Court for Middle Tennessee alleging that Morris and his RC Nashville Development Partners failed to make payments on a $10 million line of credit.
In court documents, Morris said he was beset by difficult economic conditions including high inflation and post-Covid supply chain interruptions.
“It seems only fair to a layman like me that (Oakworth Capital Bank) can take the deed in lieu of foreclosure, sell the property, a course of action I would fully support,” Morris wrote the court. “Plaintiff would be made more than 100% whole financially based on the purported value of the property.”
Morris faces numerous lawsuits
Developer Tim Morris has found himself at the center of several lawsuits regarding his business dealings.
Morris is principal of M2 Development Partners and RC Nashville Development Partners, which was also sued for allegedly failing to make payments on a $10 million loan.
In a separate suit, Oakworth Capital also alleges Morris failed to make payments on a $5.3 million loan for a project he is working on in Washington, D.C.
On April 1, U.S. Magistrate Judge Barbara D. Holmes ruled in favor of Oakworth that Morris was in default of his loan payments for that case.
“Although Morris has made some filings in this case, he failed to follow the Court’s instruction in its February 15 order to respond to the motion for entry of default,” Holmes wrote in her order. “Morris’ disregard of the Court’s order justifies entry of default against him.”
In January, real estate development company The Bradley Projects filed a suit against Morris and Patterson Street, LP, alleging the defendants failed to pay back a promissory note totaling $218,750. According to the lawsuit, the payment was due in full Dec. 31, 2023.
M2, Morris and RC Nashville are listed as defendants in another suit filed in December by office building Fifth+ Broadway in downtown Nashville. According to the complaint, M2 and RC, of which Morris is the guarantor, failed to make rent payments to the office owner. The plaintiff is seeking $184,955.46 plus additional damages and interest to be determined at trial.
Though the owner of Kinship Brewery told the Des Moines Register in November he had no plan to sell the foreclosed business in Waukee, a commercial real estate firm is now listing the building and land for sale.
Lincoln Saving Bank foreclosed on Kinship’s Waukee taproom at 255 Sunrise Dr. N.W. in October, saying the brewery and the limited liability company that owns the property, Sunrise Drive Acquisitions, had defaulted on loans of $3.5 million and $2.4 million and that Kinship had failed to keep up payments on an operating loan with a $44,898 balance.
Owner Zack Dobeck insisted in an interview the following month that there was “a path forward” for the brewery, which opened in 2021, and at the time he still was operating the taproom with attenuated hours. In December, however, amid complaints by employees that they hadn’t been paid, Kinship closed the taproom, posting on Facebook that it would reopen May 1.
Court records show that on March 21, Kinship, Sunrise Drive Acquisitions, Lincoln Savings Bank and Dobeck told a Dallas County judge they had agreed to a settlement in the foreclosure case, but needed until April 4 to finalize the terms. As first reported by the Des Moines Business Record, the property is now on the market.
Riley Hogan, a senior vice president at West Des Moines commercial real estate firm CBRE, said Wednesday he is marketing the property on behalf of Kinship’s investors. Dobeck did not respond to a request for comment.
The listing says the 12,180-square-foot building sits on 5.95 acres with a 156-space parking lot. There is a half-acre dog park, a large patio and a beer production facility with $1,5 million in equipment and a 40,000-barrel annual capacity. In addition, Kinship for a period in 2023 also was hosting a fine-dining restaurant.
Other breweries inquiring about property, agent says
Hogan said several breweries, both in Iowa and elsewhere, have inquired about the facility. Likely its best use would be as a brewery because it is ready to start making beer immediately, he said. In fact, Kinship brews continued to be on draft at some local bars as recently as last month.
But Hogan said the building also could lend itself to other uses, such as a bowling alley with a restaurant. And he said there is enough room on the site for a separate retail or office building, Hogan said.
“We could have a business owner buy the building and build their office building there,” Hogan said. “Build an apartment building there. Build condo units. There’s so many opportunities out there that present itself that are different in today’s world than it was five years ago. This building plays right into those expanding categories.”
The sales listing does not specify an asking price, and Hogan said it is negotiable. The Dallas County Property Appraiser lists the building’s assessed value at $2.4 million, but Dobeck in November said a private appraiser had valued it at $5.3 million.
Brewery sits amid booming development
Dobeck in 2020 said he had moved to the Des Moines metro with his wife, an Iowa native, from Atlanta in 2018 with opening a brewery in mind.
Areas surrounding Kinship have boomed since Kinship opened. Waukee is among the fastest-growing cities in Iowa, and single-family and multi-family housing developments are being built along the Raccoon River Valley Trail, which is connected to property. Waukee Northwest High School sits about a half mile away.
More:How will a 9-mile Des Moines bike trail open a world of possibilities?
Hogan described the project as “slightly ahead of its time,” and said that with the infrastructure work that has gone into the area since Kinship opened, it is primed for another owner to turn it into an asset for Waukee.
More:Get your steps in and get paid: Des Moines suburbs looking for special census workers
“The landscape out there has changed so much over the last 24 months, 12 months,” Hogan said. “The residential rooftop growth is feeding a bunch of demand for new retail. So I think we’re in a good position.”
Philip Joens covers retail, real estate and RAGBRAI for the Des Moines Register. He can be reached at 515-284-8184, pjoens@registermedia.com or on Twitter @Philip_Joens.
Family members, lower income bidders, tenants and community development corporations will have an easier time purchasing foreclosed homes after Gov. Phil Murphy signed a bill Friday that overhauls the sheriff’s sale process.
Under the Community Wealth Preservation Program (A5664/S4240), New Jersey homeowners experiencing foreclosure, their next of kin, or tenants living in a foreclosed property would have “the right of first refusal” — or first shot when the property goes up for auction — at the upset price, which is the minimum price a seller would accept. That typically includes the outstanding mortgage, interest, fees and other costs.
The law aims to give lower-income families a leg up against large investment companies buying and flipping single-family homes at a growing rate. It lets a foreclosed-upon family, their family members, or tenants of the property to put down 3.5% at the auction, as opposed to the 20% deposit usually required.
“Black and brown wealth is hemorrhaging through the loss of foreclosed property, and the people who live in the community often do not have deep enough pockets to even participate in the foreclosure process,” said state Sen. Britnee Timberlake, D-Essex, the lead sponsor of the bill.
More:Bill headed to Murphy would help low-income bidders buy foreclosed homes in NJ more easily
“This bill is a creative opportunity for families to save their wealth at the time of a foreclosure sale by using financing,” Timberlake said. “This legislation also levels the playing field for renters, affordable housing nonprofit developers and people who want to purchase an abandoned home to restore and live in or to create affordability. This is what equity in systems look like.”
In September 2022, Murphy conditionally vetoed a similar bill (A793/S1427), writing he “wholeheartedly” supported the overarching objectives of the bill, but that he had “serious reservations regarding the legality, practicality, and unintended consequences of several of the proposed mechanisms for achieving these goals.”
New bill after Murphy’s conditional veto
In the conditional veto, he asked lawmakers to rework language dealing with caps to auction prices, and properties that don’t sell at sheriff’s sales, among other things. He struck out a section of the bill that said the upset price — or minimum price accepted by a bank — must be capped at no higher than 50% of the outstanding mortgage, interest, fees or other costs owed.
Lawmakers reintroduced a new version of the bill, as opposed to voting to accept the language, or overriding the veto, and took out the 50% cap language.
More:Murphy conditionally vetoes bill to overhaul home foreclosure. What he wants changed
“That’s the key difference and that’s the reason our opposition was redrawn and we’re neutral on it,” said Michael Affuso, head of the New Jersey Bankers Association. “That was clearly problematic, that everyone could decide to default so they could get their principal reduced.
“When something like that could happen, government-sponsored entities like Fannie Mae and Freddie Mac could look and say, ‘Wait a second, every mortgage that we own in New Jersey is potentially worth significantly less than we think it’s worth, so we’re just not going to buy mortgages in New Jersey,'” Affuso said.
The bill Murphy signed on Friday also gave the right of first refusal to tenants of foreclosed-upon properties, which was not included in the previous bill, and required upset prices be made public at least four weeks before the sheriff’s sale, among other small changes.
How it works
For those who put down a 3.5% deposit at the auction, the rest would be owed within 90 days by cash, certified or cashier’s check, or wire transfer. They can pay with financing if they plan to use the home as their primary residence for at least seven years, and provide proof they have been pre-approved by a financial institution.
They must live in the home for at least seven years, though there are a handful of hardship exemptions for homeowners, like if the bidder or their spouse or child dies, the bidder becomes disabled or loses income.
A nonprofit community development corporation would have the second right of refusal if it agrees in writing to buy the property for the foreclosed upon family, their next of kin, or the tenant. The organization must negotiate an affordable lease for the family and give them the option to buy the property back from the organization.
“For too many, the dream of homeownership feels far out of reach,” Murphy said. “We are creating a new avenue to homeownership for individuals and families throughout New Jersey, giving many the opportunity to remain in the homes and communities they cherish while also protecting our neighborhoods from rapid investor-driven homebuying.”