The threat that the Senator Theatre would be sold to pay off its owners' other real estate debts was erased yesterday as the theater's owners obtained a $3 million loan to refinance property across the street where they had developed an office supply store and a parking lot.
The Senator, a federally recognized historic site, was not directly involved in the financial morass, said Thomas A. Kiefaber, manager of the theater and a general partner in the partnership that owns it.
But Mr. Kiefaber and J. Hollis Albert III ran short of money when another partnership they controlled developed a parking lot and a Staples office supply store near the theater, on York Road just south of Northern Parkway. And because they had personally guaranteed debts to contractors on those deals, they had faced the prospect of being forced to sell the theater to cover those debts if the properties had sold for too low a price at auction.
"While all of this has been going on across the street, the Senator has been thriving," Mr. Kiefaber said. He said confusion over which partnership owed the money made customers and suppliers think incorrectly that the Senator couldn't pay its bills.
Yesterday's deal let the partners pay off creditors, led by Lawrence Construction Co. of Baltimore, which had been trying to collect on more than $562,000 owed from the construction of the Staples store, which was finished in 1991. The parking lot is leased to Chesapeake & Potomac Telephone Co. of Maryland.
But Lawrence and other contractors did not have to complete their foreclosure on the Senator, the Staples and the parking lot, which they began by filing court papers a year ago, because mutual friends led Mr. Kiefaber and Mr. Albert to developer David Cordish. Mr. Cordish helped them arrange a refinancing through Wertheim, Schroder & Co., a New York investment bank where " Mr. Cordish has been a longtime client.
Mr. Cordish said the Staples and the parking lot generate enough rent to support the new mortgage. He said the problem was that the owners borrowed too little money when they built the store to pay their contractors. He added that their previous $2 million mortgage had too short a maturity, a fact he attributed to the theater operators' unfamiliarity with real estate finance.
"Just as they know how to manage theaters, we know how to manage retail real estate," he said. The Wertheim loan "is a sophisticated developer type of loan that I could get and they couldn't."