Parole Plaza mortgage bought

THE BALTIMORE SUN

Bernstein Cos. -- a Washington development company with a large portfolio of properties in the Annapolis area, including the Bank of America building on Riva Road -- has bought the mortgage note for Parole Plaza, an action that could portend foreclosure proceedings.

The note was held by Fleet Bank of Boston.

The owners of the shopping center, a partnership based in New Jersey, are negotiating a long-awaited sale of the property.

Recently, developers from Annapolis and Georgia tried unsuccessfully to buy the mall, which the county wanted redeveloped as a retail and residential hub.

Carl Freedman, head of the development company in Cherry Hill, N.J., that owns the mall, said yesterday that Parole Plaza partners might again be close to selling the 35-acre property.

"Things are in the works," said Freedman, who declined to discuss the details of the deal. He did say, however, that the shopping center's "owners would change."

Freedman, whose father was one of the mall's original owners, said an announcement regarding the future of the mall would be made soon. He would not say how a sale would affect the mortgage note.

Ronald S. Shapiro, a Washington attorney for Bernstein Cos., confirmed last week that a transaction between Bernstein and Fleet Bank had occurred but declined to provide more details.

Shapiro said his clients have not taken any action to foreclose on the property.

Even if the mall's owners make good on debt payments -- county records show that Parole Plaza's owners owe about $15.7 million -- the Bernstein group could make a profit off the mortgage note.

The note is secured by the shopping center property, a prime piece of real estate near Annapolis.

County land-use records put the property's value at $29 million.

"There's some potential here to make a spread between what they paid for the note and what they do with the note," said Shapiro, who added that his office has initiated discussions with attorneys representing Parole Plaza's owners.

He said it is too early to say what might come out of those talks.

Joseph Galli, a vice president with Bernstein Cos., which tried unsuccessfully to buy Parole Plaza in the 1990s, referred questions to Shapiro.

Bernstein Cos., a real estate investment, development and management company for more than 60 years, owns six developed properties in the Annapolis area, including the Annapolis Science Center on Admiral Cochrane Drive and the Best Western on Riva Road. The company also owns a hotel in Laurel.

Local officials, who have been trying to have the shopping center redeveloped for more than a decade, are left waiting and wondering what will happen next.

Recently, several developers have been vying to purchase the property in hopes of tearing down the old mall and replacing it with office and residential towers, and retail outlets, including a Wal-Mart with a "green roof" that would cut down on storm water runoff.

Annapolis developer Walt Petrie came close to buying the mall this summer but couldn't close the deal fast enough for the owners.

Soon after Petrie announced that his attempt had failed, Jacoby Development Inc. of Atlanta, which had previously expressed interest in the property, moved into the No. 1 position to buy the 30-acre site.

It is unclear what effect the mortgage note purchase will have on real estate negotiations.

According to county land records, the Parole Shopping Center LTD Partnership, of which Carl Freedman's father, Seymour A. Freedman, is president, took out a loan on the mall property for $15.7 million in March 2000 with Summit Bank, which was succeeded by Fleet Bank.

County officials, who reached a $250 million redevelopment agreement with Carl Freedman in 2001 but have no financial interest in the property, are watching from the sidelines.

"We are waiting for the dust to settle," said William A. Badger, executive director of the Anne Arundel Economic Development Corp., an arm of local government that focuses on regional business growth.

"We need to make sure this is the final chapter before we jump in," he said.

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