For the second time is its seven-year history, the private portions of Gahanna's Creekside are in court-ordered receivership from foreclosure proceedings.
As a result of two pending lawsuits, Franklin County Court of Common Pleas Judge Colleen O'Donnell appointed Brian A. Basil as receiver of the property earlier this month. Paul W. Bloomfield and Kohr Royer Griffith Inc. have been named broker and real-estate manger, respectively.
A lawsuit was filed in federal court in Columbus last September by Strathmore's Creekside Equity Partners LLC against U.S. Bank National Association and special servicer LNR Partners LLC of Miami Beach, Fla., seeking the release of at least $462,918 owned from the loans-reserve account.
U.S. Bank National Association is listed as a trustee "for the benefit of the holders of COMM 2014-UBS2Mortgage Trust commercial mortgage pass-through certificates." UBS Real Estate Securities Inc. was the lender. LNR serviced the loan.
By early June 2014, Creekside Equity had complied with all of the requirements of the loan agreement that entitled the company to receive the funds being held in the reserve account, according to court documents.
As a result of LNR refusing to release the funds July 12, 2014, Creekside placed a stop-payment order on its July 2014 debt-service payment.
On or about July 17, LNR advised Creekside Equity that the reimbursement request would be approved if Creekside Equity would reinstate the July debt service payment, according to court documents.
On July 29, the payment was reinstated with reliance on LNR's representation that it would approve the reimbursement request.
No reimbursement was made, so Creekside placed another stop-payment order on its August 2014 debt-service payment and provided written notice to UBS of the default condition.
LNR continued in its refusal of Creekside's reimbursement request, so the September 2014 debt-service payment was withheld, according to court records.
Scott A. Chappelle, president of Strathmore Development Co., said he expects Creekside Equity Partners LLC to win the lawsuit against LNR Partners and recover the funds owed and whatever damages the court deems appropriate.
Terry Benton, Strathmore principal/vice president of real estate, said he's pleased to see movement with the appointment of a third-party management company until the suits are resolved.
"Whether it takes two months, six months or a year to resolve, we are confident we will prevail," he said.
Chappelle said he's committed to the project, but the litigation is creating a number of problems, including impediments to leasing.
He said any planned expansions, such as the Creekside District Apartments, are on hold until the litigation is resolved.
In December 2014, a second suit was filed by U.S. Bank and LNR against Creekside Equity in Franklin County Common Pleas Court, as a foreclosure action.
Creekside hadn't paid on its $25.4 million loan since August and U.S. Bank is seeking repayment of $23.1 million and the appointment of a receiver.
More about the suit is available on the Franklin County Clerk of Courts website under case No. 14CV013112.
Progress has been made since the Michigan-based Strathmore purchased the three-building, 360,000-square-foot development for $10.5 million in 2012.
Upon the purchase, only 12 of the residential units had been sold compared to 94 apartments and condos that currently are occupied.
Also, 29 businesses are operating at Creekside, including the recently opened Pigskin Brewing Co.
Strathmore also initiated new signs at Creekside and has sponsored various events to attract visitors.
Creekside was opened in June 2008.
Situated on the 3.5 acres along the Big Walnut Creek, the Creekside development includes 59,710 square feet of office space, 49,350 square feet of retail space and luxury condos and apartments.
Site amenities include 10,000 square feet of public plaza, seven ornate water features, a conference and events center with a 6,000-square-foot ballroom, a public park with waterfront access and a below-street-level lagoon.
The development included a $45 million private-sector investment and a $16.7 million public-sector contribution.
