Wachovia Bank won a court order Thursday appointing a receiver to take control of the Fifth & Main condo project after its owners had little success selling units and fell far behind on what the bank says is more than $29 million in principal, interest and other expenses.
John R. Cheadle Jr. was appointed receiver of the 130-unit property by the Davidson County Chancery Court. He said Wachovia, one of the lenders, would likely try to sell all or part of the property, although that could be complicated by the slow economy and iffy condo market.
“The receivership order just came down this morning,” Cheadle said. “We’ll do a quick survey and figure out the best approach. Off the cuff, I’d say there are a couple of approaches to try – continue to market on a per unit basis or try selling off pieces of the project or the whole development.”
Fifth & Main, situated at the entrance to East Nashville, had staked its claim as a project that aimed to merge condo ownership with affordable housing initiatives. Neighborhood advocates touted it as a “gateway” development that could spur other worthwhile projects along a rugged part of Main Street just across the Cumberland River from downtown.
Otter’s Chicken Tenders and Allium restaurant are among commercial businesses that have opened in the building.
Eddie Latimer, one of the principals, said in the end that contract holders on only seven or eight condos out of nearly 130 units closed. The developer’s board recently passed a resolution saying it was “no longer financially viable,” court filings said.
Latimer said the situation with Wachovia started to deteriorate last fall as sales proved difficult. After Jan. 1, the group cooperated with the bank “working in a surprisingly positive way to this unfortunate conclusion.”
Attorney Melissa B. Alexander of the Bradley Arant Boult Cummings law firm, which represents the bank, said the property is in good shape and she was pleased with the court order naming Cheadle receiver.
Latimer said there are perhaps 30 incomplete condo units in part of the building, but construction “is pretty much done.”
Receivership is legally defined as court action that places property under the control of a receiver during litigation so that it can be preserved for the benefit of all.
“We are understandably disappointed, but remain positive that this is the right step, as receivership allows Fifth & Main to continue moving forward to achieve our original goals. We still very much believe in this project,” Latimer said.
Metro Councilman Mike Jameson, who represents East Nashville, said he intends to discuss the future of project with Wachovia and hopes it can survive.
“My only concern is about what sort of signal this might send about East Nashville, but what’s happened isn’t unique to that neighborhood,” Jameson said, referring to tighter credit markets and weaker housing sales.
Fifth & Main opened last summer with its first phase alone priced at $47 million. The Home Co., a subsidiary of Affordable Housing Resources, a Nashville organization that builds low-income housing, was its developer. Latimer is executive director of Affordable Housing Resources.
A number of affordable housing units were set aside for residents making 80 percent or less of the median income in the Nashville area, or about $38,000.
The company initially signed up about 100 would-be buyers, but with credit much tighter than it was when construction started more than two years ago, most dropped out.
Steve Neighbors, who left the project late last year, said that at the time Affordable Housing tried to work out a compromise with its lenders but the toxic loan market was too much to overcome.
“The economy is about 99 percent of the problem,” said Neighbors, who now works with a federally funded neighborhood stabilization program.
I have just learned that the 5th and Main project may come out of receivership with Village Real Estate representing the condos for sale and Freeman and Webb representing the retail and residential property for lease. No word on what pricing will be, but I would expect only a slight drop from where the condos were previously priced.