Silktown Roofing Inc., based in Connecticut, filed a lien on the luxury condo complex known as Nouvelle at Natick two weeks ago, another victim of General Growth Company’s bankruptcy case.
In papers filed in federal bankruptcy court in New York on Aug. 12, a lawyer for Silktown contends that they are still owed $326,039 by Dimeo Construction Co. on $2 million worth of work Dimeo was the general contractor for the mall expansion and construction, as well as the condos, and they are still owed money by General Growth.
In May of this year, Dimeo filed its own $12.6 million lien on the Nouvelle condos. The lien is still outstanding.
General Growth, Silktown, and Dimeo did not return requests for comment.
General Growth operates 200 malls in 44 states, and was forced to file for bankruptcy protection in April when it couldn’t refinance its loans and repay some of their bonds. Their case is being hammered out in court as the company tries to negotiate longer debt repayment periods to avoid liquidation.
This leaves contractors like Dimeo and Silktown with liens as their only short-term option to help secure the money they’re owed. As condo units are sold, the money can be directed to lien holders before General Growth.
But if past sales are any indication of near-future prospects, both contractors will have to wait some time for substantial relief.
Boston’s Otis & Ahearn Real Estate handled Nouvelle’s sales until about a month ago, said Kevin Ahearn, president of the company. Asked why the two parties split he said only: “We agreed to disagree.” Ahearn would not say how many condos have been sold to date. But in a January Globe article, he said only 30 units, or 14 percent, had been sold, despite incentives being offered by General Growth, such as two to three month delayed mortgage payments and a willingness to negotiate on condo fees and mortgage percentage rates.
General Growth grew from humble beginnings to one of the largest mall operators in the country, second only to Simon Property Group Inc. Founders Martin and Matthew Bucksbaum started the company’s mall operation in Cedar Rapids, Iowa, in 1954 and from there, the company grew to encompass malls across the Midwest. In 1993, the company moved its headquarters to Chicago.
The company acquired the Natick Mall in 1995 and started a radical transformation of the facility in 2004 by renovating the existing mall, adding 500,000 square feet to it, and rebranding it as the Natick Collection. In the process, General Growth positioned the mall as a go-to destination for luxury shopping in the Boston area, charging rents higher than some Newbury Street spots.
In Sept. 2007, the mall, newly-anchored by luxury department stores Neiman Marcus and Nordstrom, opened to the public. Sales at the Natick Collection had stalled even before the economy ebbed into a recession, with retailers reporting below-average consumer traffic, according to a May 2008(Cq- Jenn Abelson wrote it) Globe article.
Sales at the adjoining 12-story Nouvelle condo complex, which are priced from $479,900 for a 1,168-square-feet unit to more than $1.1 million for a 1,774-square-feet unit in the MLS database, have staggered since the condos hit the market in spring 2007. At the time, the most expensive condos were going for $1.6 million.
Whether the economy will recover enough to spur owners to buy luxury condominiums overlooking highways and a mall remains to be seen. For now, General Growth is working on a reorganization plan as part of its bankruptcy filing.
In late July, the company won a six-month extension from a bankruptcy judge to work out their reorganization details, which include reviewing thousand of contracts and tens of thousands of leases. The new reorganization deadline is Feb. 26, 2010.