Regions Bank has initiated court proceedings against the owners of the 19-story NASCAR Plaza following their loan defaults of $95 million that placed more pressures in Charlotte’s commercial real estate market as the 390,000 square foot office tower faces imminent foreclosure.
The same suit also called on Regions co-lender, Wells Fargo & Co to take all the necessary steps even if it reaches foreclosure proceedings if only to start collecting on the huge amount of default, which is only one of the strings of loan non-payments that began besetting the city’s commercial center.
Also, the bank filed for foreclosure proceedings against the 302,000 square foot EpiCentre complex uptown earlier this summer, pushing the property owners to sue for bankruptcy protection afterward.
NASCAR Plaza was developed by Lauth Group Inc and launched the office tower in May 2009 to complete the four skyscrapers that were built in Charlotte on the same year, which then ushered a booming a commercial real estate in the area that soon fizzled out.
Regions and Wells Fargo granted the $95 million loan in 2007 to Corporate Plaza Owners, co-owner of the office tower and an affiliate of Lauth, with the bank providing half of the total funds while Wells Fargo assumed the responsibility of overseeing the loan.
Regions clarified on its suit that the loan had already matured in November last year and Lauth was informed in December on the same year of the need to make payment of more than $70 million that the property still owed.
The suit added that Wells Fargo contributed to the damage done on Regions as it failed to collect or take the necessary steps to protect the lenders from absorbing huge losses, as the latter stressed that it sent an appeal to the former, urging it “to exercise all available remedies to collect the loan including, without limitation, immediately filing an action to foreclose the deed of trust.”
Regions Bank lamented that it cannot initiate any legal actions against the NASCAR property without the cooperation of Wells Fargo as it stressed that its apparent recalcitrance has so far cost both lenders millions of dollars on losses.
In fact, Regions said that it was informed by a Wells Fargo representative that both banks were poised to bleed up to $40 million on the loan while Wells surprised Regions by bidding to buy the bank’s $37 million share of the outstanding loan to about 42 cents on the dollar.
The bank clarified that by the end of June this year, NASCAR Plaza was still 60 percent vacant and this situation was further worsen when Wells Fargo decided to purchase a bank building in Charlotte, which prompted Regions to comment on its suit that “Wells Fargo knew or should have known that its decisions to downsize and vacate office space in Charlotte would have a detrimental effect on the value of NASCAR Plaza.”
Industry sources said that the NASCAR issue could further push the office tower into more woes as real estate brokers would have second thoughts in negotiating leases at the building but that could change once a new owner takes over and implement crucial changes in the property’s management.
They also predicted that the lawsuit would compel Wells Fargo to introduce a better offer for Regions’ share of the loan and then sell the entire note to a new investor, which should lead to NASCAR’s eventual foreclosure.
The same sources added that a new owner would eventually lease and earn from the distressed office tower “but it’s not going to be Regions, Wells or Lauth.”