Provident Bank of Maryland has filed a foreclosure lawsuit against the owner of the Equitable Bank Center II in an attempt to auction the eight-story, downtown project next month to satisfy outstanding debt.
The bank's action, taken against a partnership controlled by Ackerman & Co., results from the Atlanta-based developer's failure to repay a $1.45 million loan dating to September 1989, according to documents filed in Baltimore Circuit Court.
"Their loan has matured, and has not been repaid," said Richard J. Oppitz Jr., a Provident managing director. "We're taking steps available to us in an attempt to satisfy the outstanding balance."
Provident's outstanding debt as of Dec. 21 was $1.05 million, according to the documents filed last week.
Although the two sides are attempting to renegotiate the mortgage, Provident has set a foreclosure auction for Jan. 12.
If the auction is held, it will mark the first foreclosure auction of a major downtown office property since August 1993, when Metropolitan Life Insurance Co. took control of the 23-story One Charles Center, for $11.5 million.
Ackerman & Co. officials could not be reached for comment yesterday.
Provident executives acknowledged their efforts to recapture the debt could be futile, since the bank's loan on the 160,000-square-foot building is subject to first and second mortgages held by First American Bank, N.A., and the Resolution Trust Corp. (RTC), the federal agency charged with disposing of assets from failed savings and loan institutions.
In all, those mortgages amounted to $23.6 million as of January 1991, when the mortgage was amended, according to city records. Because Provident's mortgage is subordinate to both the RTC's and First American's, who would be repaid first, Provident's interest could be wiped out at an auction.
Provident became involved with the 100 S. Charles St. building when it assumed a loan to Ackerman from the defunct law firm of Melnicove, Kaufman, Weiner & Smouse, P. A., a one-time major tenant in the project.
The RTC's involvement dates to April 1990, when it seized Baltimore Federal Financial FSA, the building's original lender.
Despite the threat of an auction, the RTC is working to sell the building and has entered into negotiations with a number of potential buyers.
"We have an interest in pursuing it, but it's a complicated process and it hasn't gone very far," said Joe Galli, a principal of the Bernstein Cos., a Washington real estate developer and investor. "And this will certainly delay any disposition."
Ackerman completed Equitable Bank Center II in 1988, after obtaining development rights from former lender Equitable Bancorp. and acquiring the project's land from the city for $884,028, records show.
The building, bounded by Charles, Lombard and Pratt streets and the Garmatz Federal Court House, is 81 percent filled. Its occupants include Blue Cross & Blue Shield of Maryland's subsidiary CareFirst and Mead Data Central.
Equitable Bank Center II is one of three downtown projects that Ackerman developed here in the 1980s.
The others are the adjacent 17-story Equitable Bank Center I and the eight-story Constellation Place, at 1 E. Pratt St.