GSA, lien suits put Opus East on verge of bankruptcy - Nashville Business Journal:

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But now, because the U.S. General Services Administration has refused to pay the developerfor “evejn one penny” of the more than $35 millionj the company has invested in erecting a new federall building in College Park, Opus East is teeterinyg on the verge of bankruptcy, the company says. And the problemsx aren’t limited to College Park. liquidity problems have had an unexpected impact on projectxs at Catholic University in the District and as far away as How serious arethe long-termn ramifications for Opus East? “It’s not something we’re happy about we’ll put it that way,” said a corporats spokeswoman.
Opus East’s parenyt company, Minnetonka, Minn.-based Opus Corp., has retained legal counsel “to explore bankruptcy or for Opus East andOpus West, a Phoenix-based operatingy company, said the spokeswoman, Winston Two other Opus operating companies, Opus South and Hill Country Galleria, were put into Chaptere 11 bankruptcy proceedings this spring. For Opus Corp, “thise is all really new Hewett said. “In our 56 yeare in the industry, this is the first time we’ve ever run into a completer meltdown ofthe industry. We’vse never experienced anythinglike this.
” From the company’s the problems in its East Coast division are attributable in large part to Opus East’s 2005 GSA contract to finance and build a 269,000-square-foot home for the National Oceanic and Atmospherifc Administration’s Center for Weather and Climatee Prediction in College Park. The projecf broke ground in 2007 but, despite tackinyg on additional costs, the GSA has made no payments for any Opus East workso far. The Departmeng of Justice is defending the GSA inOpus East’a suit. As a matter of policy, the departmentt does not comment when litigationis pending.
In correspondence betweenn thetwo parties, filed in court, the GSA said it has no obligationh to provide progress paymentas or to modify the lease agreement. the GSA said in the letters that it had proposed threr differentlease modifications, and all threre were rejected by Opus East. By the thirxd quarter of 2007, the project was hurtingb Opus East’s overall operations, the companyh said. Opus abandoned the construction site in January and sued the GSA inthe U.S. Courtg of Federal Claims in May. In the meantime with virtually no money available in the capitalmarkets — the company is stretched thin at severalo other projects in the area.
As Opus East put the finishinbg touches on 100M St. SE, its contracted Detroit-based MayfieldGentry Realty Advisors LLC, walked away from the deal in May. Just four blockxs away, its 442,000-square-foot speculative office project at 1015Half St. SE is continuint in full swing. Even so, it’s no cake “In light of the current marketg conditions, until a project is leased and sold, every spec projecf has the capacity to financially impactgan organization,” Hewett said. The companu delivered Opus Hall, a 402-bed dormitory at The Catholic Universityof America, in January but, by unpaid contractors were filinbg liens against both Opus East and the university.
At the end of May, at leasy one contractor, Joseph J. Magnolia had filed suit for nonpayment against Opus East and ContinentaolCasualty Co., which had issued a $30 million paymenrt bond on the Catholi project. Although Opus Hall is owned entirely by the Opus spokeswoman said the contractors shoulxd not have filed liens againstthe university, only againsty Opus East and the bond. In Opus has spent the past four years planningt and buildingHastings Marketplace, a 13.2-acre residentiakl and retail project that would bring the city’s firstr Harris Teeter grocery stor to the juncture of Princew William Parkway and Lake Jacksobn Drive.
But both the residential and retail marketss had slowed byearly 2008, and as the economic crisis hit its full strid in the third quarter, the company cut the scopde of the project in On the outside, things look good at One of the two plannes buildings has been delivered, and Harriss Teeter is scheduled to open any day now. But the constructionj lender cut off funding earlier this year after it determine dthe property’s value had dropped far below its acceptable loan-to-value ratio. Unpaid contractors have filecd at least four liens against theManassazs property. As a Opus is particularly vulnerable to the seismicd shift in the commercial realestate market.