One of Tacoma’s successful examples of historic renovation is now controlled by a Seattle investment group that slipped the property right out of a nasty business dispute.
Albers Mill, the 1904 grain mill renovated a decade ago into loft apartments and retail space, was foreclosed on in April for $1.4 million to satisfy a second mortgage on the property.
GMAB LLC, the mortgage holder and now new owner of Albers, has ties to Ron Sher.
Sher’s a real estate developer known for his transformation of Bellevue’s Crossroads shopping center from a run-down trouble spot to a thriving hub of local business.
He also owns Third Place Books, which is built around the idea of integrating retail into the community.
GMAB is managed by Sher GP Inc., whose chairman is Sher. Other officers include Christopher Cole and David Beckerman, both of whom are principals along with Sher at a Bellevue-based real estate investment firm. Sher couldn’t be reached for comment Wednesday.
The mill, at 1821 Dock St., was part of the first phase of new commercial development on Tacoma’s Foss Waterway after a massive environmental cleanup. The project was Anchorage-based developer Grace Pleasants’ introduction to Tacoma.
She and her partners overcame opposition from backers of the next-door Museum of Glass, including architect Arthur Erickson, city officials and the developers of Thea’s Landing, all of whom wanted the building demolished. She persuaded the Foss Waterway Development Authority Board to instead give her company the chance to remake the building.
In the early 2000s, Albers opened with 36 loft-style apartments and 10,000 square feet of commercial space.
It offered one of the first private residences along the restored waterway and has had high occupancy since then.
Its commercial tenants are an art gallery and Pleasants’ business office.
Pleasants has gone on to work on other Tacoma projects. Most recently she helped broker the deal that resulted in Portland-based brew pub operator McMenamins purchasing another city jewel, the run-down Elks Temple, with plans to renovate it. She and her business partner Rick Moses tried to build a new mixed-use building north of the Temple, but those plans fell through.
Meanwhile, various limited liability companies with stakes in Albers Mill have been suing each other for more than a year. County and federal court records indicate a complicated dispute involving several LLCs and the primary lender, U.S. Bank.
The renovation of Albers Mill was accomplished through an intricate financing structure involving various tax credits for historic buildings and economic revitalization. In early 2011, a threshold involving those credits was reached, and the $6.3 million loan became due in full.
Pleasants said in court documents that the bank didn’t respond to a payoff offer. Instead, it took one of her companies, Heritage Property I LLC, to court after attempting to fire it as manager of the property. The bank claims Heritage was incompetent. Heritage called the suit a thinly veiled attempt to steal the property. In April 2011, the dispute moved to bankruptcy court. In a filing, Pleasants explained the situation this way:
“(T)he big picture here is that (U.S. Bank) is trying to wipe out Heritage’s development and management fees by removing it as manager, and then take over the debtor’s real property. In a nutshell, U.S. Bank is trying to wipe me and my partners out every which way it can.”
Meanwhile, GMAB LLC held a second mortgage on the property for about $2 million.
The bankruptcy court ruled GMAB was free to exercise its rights under that mortgage, which include taking the property through foreclosure to satisfy the debt. In April, it did. Now it controls the property – which court documents indicate is worth between $6 million and $8 million – for a mere $1.4 million.
Who will finally end up the owner of Albers isn’t clear. U.S. Bank still holds the first mortgage, which gives it rights ahead of GMAB that must be satisfied by any new owner, be it GMAB or a third party.
It’s also unclear what will happen now in the dispute between Pleasants’ companies and U.S. Bank. Pleasants declined to comment in an email Wednesday.
kathleen.cooper@thenewstribune.com253-597-8546
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