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VOL. 125 | NO. 76 | Tuesday, April 20, 2010

Lehman Bros. Reclaims Midtown Acreage

By Eric Smith

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The continuing saga of the Midtown land slated for a major mixed-use redevelopment took another twist Monday morning when the lender reclaimed the property for $3.15 million on the Shelby County Courthouse steps.

But the future of the area – a collection of residential and commercial parcels that comprise about five city blocks and at least 26 acres at Poplar Avenue and Cleveland Street – still remains unknown.

After three rounds of a bidding war with a Nashville development company, Lehman Brothers Holding Inc. formally acquired the roughly 80 parcels in a substitute trustees’ deed.

Stewart G. Austin Jr. and Mathew Brinner of Glankler Brown PLLC served as substitute trustees in the matter, spending about 40 minutes reading the lengthy notice of sale before bidding began.

Glankler Brown’s R. Hunter Humphreys Jr. opened the auction with a proxy bid of $2 million on behalf of Lehman Brothers.

The only other bidder was Michael Chance of Baker, Donelson, Bearman, Caldwell & Berkowitz PC, representing UP Development of Nashville. He countered Lehman’s opening bid with an offer of $2.1 million.

After another couple rounds of bidding, with the amounts increasing by $50,000 or $100,000 from the two parties, Lehman’s bid of $3.15 million was unmatched, leaving the company as the property’s new owner.

Glankler Brown attorneys deferred comment to Lehman Brothers, but a call to the company’s spokesman for the properties wasn’t immediately returned.

Despite the uncertainty surrounding the project, optimism remains for the fenced-in and blighted properties.

A fire inspector watched the bidding process with the hope that someone will soon raze the remaining buildings to reduce the number of fires and risk of arson.

And John Buffaloe, who lives just a couple of blocks away from the property, attended the auction along with other residents who said they want some sort of redevelopment plan to move forward.

Many people have expressed a desire to see even a portion of the previous owner’s original plan, which called for creating a mixed-use site to possibly include 550,000 square feet of retail and 300,000 square feet of residential use.

The ambitious redevelopment plan even attracted Target as a big-box anchor before the property fell victim to economic upheaval.

Its previous owner, WSG Memphis LLC, an entity related to a Miami developer, defaulted on a $14 million loan through Lehman Brothers.

Lehman Brothers in September 2008 filed for Chapter 11 bankruptcy protection, further muddying WSG’s financial situation.

Lehman has filed foreclosure actions against WSG properties elsewhere.

WSG bought most of its parcels, all of which are south of Poplar and on both sides of Watkins Street, in May 2007 in an $11.6 million deal that comprised several transactions.

The company filed a 26.27-acre development plan in January 2008 with city officials.

In its completed form the development was set to include a mix of neighborhood retail shops, larger retail stores and restaurants.

PROPERTY SALES 92 242 2,507
MORTGAGES 108 336 2,943
BUILDING PERMITS 202 643 6,711
BANKRUPTCIES 43 176 1,963