Dayton project developer fights lender takeover attempt
An office and retail renovation of the historic Dayton Dry Goods building in downtown Minneapolis has turned into a takeover and the developer of the project intends to fight it.
Over the past four years, 601 Minnesota Mezz has performed a $ 350 million remake of the 1.2 million square feet. office building with 300,000 square feet of retail on the first three floors. It was due to open later this year, but retail leasing has taken a hard hit from the pandemic and major lender Monarch Alternative Capital is trying to repossess the structure that dates back to the turn of the 20th century.
Monarch acquired the mezzanine debt position of what is now called The Dayton’s Project just four months ago, while the commercial portion was still not leased. 601 Minnesota Says Monarch Is Engaged In A “Predatory Loan-To-Possession Program” And Has Complained To Minnesota State Court, Saying Rental Activity Resumes As Pandemic Mounts .
âThis will be the first space of its kind in Minnesota,â said Mark Karasick, one of the two managing partners of 601 Minnesota Mezz. “We will support the local business community with a designated area for small retail stores and kiosks, specializing in products made here in Minnesota, including those made by local artisans and minority-owned businesses.”
Although the renovation was largely completed by the onset of the pandemic in early 2020, and 601 Minnesota claimed to have two lease commitments from major retail tenants, no lease was signed after the outbreak. civil unrest caused by the death of George Floyd in Minneapolis.
Although the developer is not in default on its loan, Monarch claimed that 601 Minnesota Mezz was in technical default for not meeting various “rental bar” dates.
601 Minnesota Mezz lawsuit seeks declaratory and injunctive relief and $ 270 million in damages from Monarch and states that “a predatory lender … seeks to oust the owner-developer of a local Minneapolis real estate project and to take over the project for himself. “