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Now an outsider, Ed Hale wants to clear the air

FinanceReal EstateAdvertisingReal Estate SellersFinancial and Business ServicesEd Hale

Ed Hale wants to buy the Baltimore Arena, but the city said the aging facility is not for sale.

Two years after his departure from First Mariner Bancorp, the bank he launched and turned into the city's largest, Hale finds himself on the outside looking in.

These days Hale operates out of a windowless office decorated with black-and-white photos of the port of Baltimore in a nondescript Rosedale office park. It's a far cry from his one-time office in a 17-story Canton tower with a commanding view of the harbor.

Hale doesn't know why he has a poor relationship with City Hall, though he called the current administration "thin-skinned." He also said he was not forced out of the bank by a group of New York investors.

And he doesn't want anyone feeling sorry for him. Ed Hale is doing well — especially financially, he said. He's made a handsome profit on real estate investments in Canton and hopes to sell nearly 3 acres near the new Shops at Canton Crossing to a developer that could build 500 apartments.

The 66-year-old said he misses some aspects of banking, but not the frequent meetings with regulators.

"I miss the people, the esprit de corps that we had," he said. "We were a tour de force in terms of being a local bank."

A trucking magnate turned banker, Edwin F. Hale Sr. launched First Mariner in 1995, building the subsidiary, 1st Mariner Bank, into the largest independent bank in Baltimore. It ran into trouble during the housing crisis, he said, after the bank was forced to buy back soured mortgages it sold to Wall Street firms and lost about $60 million on the loans.

Federal regulators ordered First Mariner in 2009 to come up with more capital — something the company has struggled to do. In 2011, it struck a deal with New York-based Priam Capital, which offered $36.4 million for a 25 percent stake in the company — but only if First Mariner could raise $123.6 million from other sources.

The deal was announced along with Hale's resignation, which was to occur once the transaction was completed. Hale left before that in December 2011. First Mariner never raised the money and dropped out of its agreement with Priam last year.

Banking experts and reports on Hale's departure stated that Priam required that Hale step down as part of the deal, but Hale said that's not true and now he wants to set the record straight.

"I have a lot of pride in what I did," Hale said. "There was no way I was going to have some New York private equity firm force me out."

Hale said he resigned as chairman and CEO as part of a tax-planning strategy after recognizing a big gain on the sale of property. To eliminate the tax bill, he opted to sell 1 million shares of First Mariner stock at a loss to offset the real estate gains. However, a First Mariner policy required Hale to step down if he wanted to sell the shares. First Mariner declined to comment.

"It was my own choice. If I knew I could sell the stock and stay there, I would still be there today," he said.

Asked why he waited so long to correct the record, Hale said, "I didn't feel the need to do it, but it kept going on and on and on. People would randomly come up to me and say, 'Poor Ed, it's a shame you're not there.' I just felt like I wanted to set the record straight on a whole host of things."

The timing seemed right, he said, because of the recent opening of the Shops at Canton Crossing.

A dozen years ago, Canton Crossing was just a vision by Hale to build a $100 million complex that included an office tower, condominiums, restaurants and stores on contaminated waterfront property at Boston and Clinton streets. Hale owned 22 acres at the location with a contract to purchase 31 more.

The toxic waste was cleaned up and a 17-story office tower sprang up that became home to First Mariner as well as Hale, who occupied the penthouse.

"Before Ed came along and focused on that site, no one had a vision of what that was going to become," said Doug Schmidt, a principal with Chesapeake Real Estate Group, one of the developers of the Shops at Canton Crossing. "It was his force of will and personality to get a major office tower built on that old industrial site."

Hale also wants to set the record straight on the sale of the office tower, which was on the verge of foreclosure after a lender said he defaulted on an $84 million loan. This occurred during the credit crisis, Hale said, and he couldn't secure permanent financing for the project.

Columbia-based Corporate Office Properties Trust, which held a second mortgage on the property, acquired the tower and much of the surrounding land owned by Hale for $125 million.

Hale said the deal generated a $25 million profit for him. He also sold his contract to purchase the other 31 acres — now the site of the Shops of Canton Crossing — a transaction that netted him about $11.8 million after cleanup costs, he said.

Some of these gains contributed to the tax issues that caused Hale to leave the bank.

He still owns 2.78 acres in the area and said he's close to making a deal in the next week or so with a large company, which he declined to name, that could build 500 apartments. "Probably the last major development on the property," he said.

Dealings Hale has with the city aren't going as smoothly. He acknowledged that he has a poor relationship with the current administration at City Hall.

"I don't know why they are upset with me, but they are," he said.

"This administration supports anyone who wants to do business in Baltimore City," said Kevin Harris, a spokesman for the mayor. "As a businessman, Mr. Hale should understand that sometimes you have to tell people things they don't want to hear because it's the right thing to do, not because you have anything against them."

It probably hasn't helped that Hale's company, Arena Ventures, sued the city in March over nine billboards Hale put up about a decade ago at the downtown arena that once bore the 1st Mariner Bank name. (First Mariner decided not to renew its naming rights, and the venue is now called the Baltimore Arena.)

Hale claims the billboards belong to him; the city says it owns them.

The lawsuit continues. Though the city hasn't budged from its position that it owns them, it wrote a letter last month giving Arena Ventures the chance to "exercise its purported right of ownership" and remove the billboards and repair any damage they may have done to the building. If not, the city said, it might take the billboards down itself and charge Arena Ventures the cost of doing so.

Hale said he doesn't plan on taking the billboards down.

While the city was writing to Hale, his lawyer wrote to the city to express Hale's desire to buy the arena for a yet-to-be-determined price. Hale complained that it took more than a month to get a response.

Kaliope Parthemos, the city's deputy chief for economic development, said she only received the letter from Hale's lawyer on Monday and immediately responded.

"The arena is not for sale," Parthemos told The Sun. "If it ever becomes for sale, we will let him know."

The city is reviewing a Greater Baltimore Committee proposal to build a new arena that's connected to an expanded convention center, Parthemos said. Meanwhile, the city is happy with the arena's current manager and has renewed its contract, she said.

Hale said he has other investments to keep him busy. For example, he owns the national champion indoor soccer team the Baltimore Blast, which he moved to Baltimore County in February, citing his poor relationship with the city. The team still plays at the Baltimore Arena.

Hale remains the largest stockholder of First Mariner, whose shares traded at 98 cents per share on Thursday, with a nearly 12 percent stake.

First Mariner returned to profitability, although in the quarter ended in June it lost money as mortgage refinancings dropped while interest rates rose.

Hale said he would like the bank to move away from interest-sensitive mortgages to more predictable commercial lending.

"I would like to have some say in what's going on there," he said. "But I can't and I don't. Nor am I asked."

eileen.ambrose@baltsun.com

Copyright © 2014, The Baltimore Sun
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