Jeramey Jannene

Four Milwaukee Buildings Headed To Auction Block

Iron Horse Hotel, downtown office building, 30th Street Corridor redevelopment candidate and Park Place office building on the market.

By - Aug 10th, 2023 04:48 pm
Clockwise from top left - The Iron Horse Hotel, The Sentinel Building, 3100 E. Meinecke Ave. and 11800 W. Park Pl. Park Place photo from Marcus & Millichap auction listing, others by Jeramey Jannene.

Clockwise from top left – The Iron Horse Hotel, The Sentinel Building, 3100 E. Meinecke Ave. and 11800 W. Park Pl. Park Place photo from Marcus & Millichap auction listing, others by Jeramey Jannene.

Four Milwaukee properties will soon be sold to the highest bidder in separate auctions. But each has taken a wildly different path to get to this point.

The Iron Horse Hotel would be sold at auction to resolve foreclosure and bankruptcy cases that can ultimately be traced back to the pandemic. The effectively-vacant The Sentinel Building, an aging downtown office building, was subject to an aborted apartment conversion plan during the pandemic and a transfer in lieu of foreclosure. The former Perlick Corporation factory campus in the 30th Street Corridor was the site of two failed attempts to secure competitively-awarded tax credits to convert it to affordable housing. And a two-story office building in the Park Place business park sits approximately half full after being sold by its anchor tenant to an investment group in 2018.

Iron Horse Hotel – 500 W. Florida St.

One of Milwaukee’s premier hotels could be sold to resolve a 2021 foreclosure claim from Rialto Capital. At the request of developer Tim Dixon, the Iron Horse Hotel would hit the auction block next month.

The hotel has continued to operate without interruption through the foreclosure case.

Dixon’s Rider Hotel LLC filed Chapter 11 bankruptcy in Delaware in 2022, slowing the foreclosure suit. An income statement submitted as part of the bankruptcy case shows the entity lost $88,411 in June, the last month available, but turned a gross operating profit of $384,919 on $1.05 million in revenue.

A new filing in the bankruptcy case says brokerage JLL began marketing the property for sale in July and has a list of 2,400 investors whom it believes may be interested. It’s looking to launch an auction on Sept. 19.

The sale would close on Oct. 16 according to Dixon’s legal team, which includes attorneys from Delaware, Illinois and Pleasant Praire, WI. Debt holders would be able to bid using the value of their debt. A stalking horse bidder would be used to establish a minimum price.

The auction request was filed on Aug. 8 and needs to be approved by the bankruptcy judge overseeing the case.

The 100-room hotel opened in 2008. It is currently assessed for $21.28 million.

The Sentinel Building – 225 E. Mason St.

As of 2021, an investment group led by Adam Gollatz intended to convert the 10-story The Sentinel Building, 225 E. Mason St., into 33 apartments.

Constructed in 1892 and home to the namesake newspaper until 1930, the 10-story building was 70% vacant when Gollatz’s Mason Street Ventures LLC acquired it for $2.1 million in February 2021 as part of a land contract.

But it was transferred back to prior owner Doug Young in lieu of foreclosure in January. It was initially relisted for sale for $2 million, but now will be auctioned off.

The building’s height hides the fact that it’s a small structure by downtown standards.  It has 30,848 square feet of space according to city assessment records. A single floor in the 25-story BMO Tower to the north is more than 25,000 square feet.

It is currently 3% leased, according to an auction listing. The listing highlights that it is well suited for redevelopment into 32 to 36 apartments and a portion of the permitting has already been completed.

The starting bid is $500,000. The auction runs from Sept. 5-7. The property is listed with Joe Eldredge of Colliers International.

Park Industrial Campus – 3100 W. Meinecke Ave.

Developer Cornelius McClendon twice pursued redevelopment of the former Perlick Corporation factory at 3040-3100 W. Meinecke Ave. into affordable apartments. But the Wisconsin Housing and Economic Development Authority did not award McClendon’s development team low-income housing tax credits for either variation of his redevelopment plan.

The 184,000-square-foot complex, a collection of brick buildings located along the 30th Street railroad corridor and just north of W. North Avenue, is currently 11% leased, according to the auction listing.

The 2021 redevelopment proposal called for up to 90 apartments and 50 parking spaces on the 2.1-acre property. The redevelopment proposal also relied on the use of historic preservation tax credits. The Common Council endorsed a zoning change to enable the project.

The auction listing says the complex could be renovated or converted to residential housing. “This area is perfect for multi-family redevelopment since nearly 60% of the population rents as their primary form of housing,” says the listing, while also touting low industrial vacancy rates.

The complex was built in phases from 1900 through the 1940s according to a Wisconsin Historical Society survey. McClendon would have additionally used historic preservation tax credits to redevelop the property.

The complex is owned by Walter Kennison‘s Tierra Subida Limited Partnership, which would have sold the building to McClendon’s team. It’s now headed to the auction block.

The starting bid is $450,000. The auction runs from Aug. 21-23. The property is listed with The Dickman Company brokers Zach Drake and TJ Huenerbein.

11800 W. Park Pl.

A two-story, 54,839-square-foot building located at the western edge of the Park Place business park on the city’s Far Northwest Side could soon have a new owner.

The building is currently 54% leased, with an auction listing promoting it as a “value-add asset with a long-term tenancy.” It’s one of several low-slung office buildings that dot the suburban-style office park.

Liberty Mutual leases the entire second floor on a lease that runs through February 2025 and has two five-year options to extend its lease. It initially developed the building in 2001.

An affiliate of Liberty sold the property in 2018 for $3 million to Illinois-based LP Park Partners, a partnership of Levin Properties and REvest Partners for $3 million. It is currently assessed for $3.1 million.

The building sits on an 8.05-acre site just off Interstate 41. It includes a 329-space parking lot and a large pond. An LED lighting upgrade was completed in recent years with PACE financing used to finance the repairs.

The starting bid is $550,000. The auction runs from Aug. 21-23. The property is listed with Don Schmidt of Marcus & Millichap.

While the fortunes of the business park have ebbed and flowed in recent years as the market has evolved and properties have been renovated, at least one developer has turned a substantial profit on their investment. Based on publicly-available sales records, New York City-based Sovereign Partners appeared to earn millions by rehabilitating and leasing One Park Plaza, one of the twin 12-story towers at the center of the business park, and another nearby building.

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