Foreclosure of large portions of University Town Center in Hyattsville became a near certainty last week when the project’s construction lender, Wells Fargo, took control of the property as the highest bidder at public auction.
The bank bid $25.1 million for its own distressed loan on the property Aug. 10, effectively ensuring that it will complete the foreclosure process and assume ownership.
Wells Fargo became an investor in the project in October of 2006, when it issued an $83.3 million construction loan, according to court filings. Shortly thereafter the real estate market began to turn sour, and the developer, Prince George’s Metro Center Inc., began defaulting on payments shortly thereafter. As of April of this year, the developer still owed $60.5 million in principal, interest and penalties.
The court named Rockville-based developer Foulger-Pratt a receiver for the property.
M. Scott DeCain, of Bald Eagle Partners, a consultant to Prince George’s Metro Center Inc., said he had reached a settlement with the bank in which the development team was relieved of any recourse liability and would continue to manage the property until Wells Fargo decides whether to sell it in the future.
“I think the bank will ask us to continue to manage the assets. That’s day-to-day, that could change at any moment, but that’s my understanding,” McCain said.
Not all of University Town Center, located at the intersection of East West Highway and Belcrest Road, is being foreclosed upon. The properties at stake include Metro One, a 289,000-square-foot office building occupied by the Federal Emergency Management Agency, a 112-unit condominium building, a 22-unit apartment building, a 14-screen movie theater by Consolidated Theaters and two future development sites.
McCain said the development team and an unnamed capital partner still planned to submit an offer to buy the property at the right time. “I can’t speak for what Wells will do. Sooner or later they will sell it — that could be tomorrow, that could be five years from now,” he said. “I can tell you that whenever that is, we will be there with our capital partner to do our best to acquire it.”
A Wells Fargo representative at the auction declined to be named or to say what the bank’s plans for the property were. He was one of a dozen people who gathered in front of the Prince George’s County Courthouse for the auction, held by Alex Cooper Auctioneers.
One other company — whose representative also declined to be identified — showed up to bid. A man dressed in blue jeans, brown leather shoes and a button-down shirt, submitted a final bid of $5.75 million, saying, “I got to make this interesting.”
The Wells Fargo representative then pulled out a calculator and upped the price quickly to more than $10 million, and then topping $25 million, a number high enough to likely ensure that the court will give final approval to the foreclosure.
“It’s yours,” said the losing bidder. But it already was.