By Mickey Shuey | Indianapolis Business Journal
For The Republic
INDIANAPOLIS — An Indianapolis developer who is pursuing several projects in Columbus and recently listed one of the tallest and swankiest apartment towers in downtown Indianapolis for sale is now facing foreclosure on the property after allegedly failing to make payments on its loan.
Flaherty & Collins Properties faces a nearly $101 million lawsuit from California-based lender Prime Finance after allegedly defaulting on payments for 360 Market Square, the gleaming 27-story tower at the northeast corner of Alabama and East Market streets.
360 Market Square has 292 upscale apartments, a pair of ground-floor retail tenants in Whole Foods Market and Tinker Coffee Co. and a 525-space parking garage.
Flaherty & Collins Properties recently sought to either recapitalize or sell the tower. IBJ reported in March that the firm hired the Indianapolis office of Dallas brokerage CBRE to identify and negotiate with candidates. At the time, the parties declined to disclose to IBJ an asking price for a stake in the tower or how much of a stake the Indianapolis-based developer and property manager was hoping to sell.
Details on the status of that process were not immediately available Tuesday.
Since it was completed in 2018 at a cost of $120 million, the tower has become one of the city’s priciest residential properties, with an average rent of $2,365 per month, or $2.58 per square foot. The average unit size in the property is 915 square feet, according to CBRE.
According to the lawsuit, Flaherty & Collins missed its May and June payments tied to a $99.3 million loan it secured in July 2021. The loan has a principal balance of $97.9 million, which Prime said it is calling as due in its entirety after the developer missed its payments.
A spokesperson for Flaherty & Collins acknowledged the lawsuit in a statement provided to IBJ, indicating the firm had already been trying to work with Prime Finance to find a resolution.
Flaherty & Collins Properties broke ground on The Taylor, a $41 million mixed-use project in downtown Columbus, in April 2022. The Taylor includes 200 apartments, space for a 10,000 square foot grocery store, and 400 parking spaces off Second Street in Columbus.
In November 2023, the Columbus Redevelopment Commission approved a project agreement for a mixed-use development in front of the Cummins, Inc. parking garage that calls for a $5.8 million subsidy from the city that was proposed by Flaherty & Collins. The commission agreed to create a new TIF district to support the project and a forgivable loan to partially fund it.
Flaherty & Collins, the developer of The Taylor, presented a proposal to create a mix of apartment units and commercial space in front of the parking garage, which is located along Washington Street between Sixth and Seventh streets. The proposed site is currently owned by Cummins, with Flaherty & Collins indicating that they plan to purchase it later on.
Deron Kintner, general counsel with the developer, said that the building is expected to include approximately 10,000 square feet of commercial space on the ground floor and 50 apartment units on the four stories above. He estimated that about 60% of the units will be one-bedroom and 40% will be two-bedroom.
The total project cost is estimated at $15.5 to $16 million, he said.
The resolution approved by the commission authorizes the use of $5.8 million in TIF funds to cover a financing gap, which was later approved by the Columbus City Council.
“We were very surprised to learn of the court filing,” Nina Settappa, marketing manager for Flaherty & Collins, said in an email. “We have been working collaboratively with the lender to navigate the situation. This included offering a significant pay down of the outstanding loan, in addition to the millions we have already funded over the last several years to keep the non-recourse loan current.”
Settappa said management of downtown real estate “remains very challenging,” citing increased operating costs and flat revenue, adding that the 360 Market property accounts for about 3% of the company’s national portfolio. Settappa did not respond to questions on the status of Flaherty & Collins’ effort to either recapitalize or sell the property.
Prime is asking the court to foreclose on the property and put it into a sheriff sale. The sale proceeds would go toward paying back the debt and foreclosure costs.
The lawsuit also asks for a judgement awarding Prime additional monies, including $2.16 million in interest on the overdue portion of the loan; more than $544,000 in default fees; an exit fee from the loan of nearly $149,000; late charges totaling more than $132,000; and $310 in miscellaneous charges.
It’s also asking to be allowed to take over the collection of rent in place of Flaherty & Collins.
No additional proceedings have been scheduled in the foreclosure suit, according to court records.
The city contributed $5.6 million in land for the project, along with $17 million in tax-increment financing for infrastructure work. It also had significant input on the project’s design and components.
— The Republic contributed to this story
