Foreclosure suit tests HDG Mansur on a new front

The sale of the loan on Hamilton Proper’s country club has created a new legal headache for Indianapolis developer HDG Mansur, which already was fighting lawsuits on other fronts.

Within weeks of purchasing the loan from Rhode Island-based Textron Financial Corp., HGCC Lender LLC on Oct. 10 filed a $4.8 million foreclosure lawsuit and asked a Hamilton County court to appoint a receiver.

It was a stunning turnabout after years of good relations with Textron, HDG Mansur CEO Harold Garrison said. He said the lender seized on the fact that part of the September mortgage payment was perhaps six days late.

“We were totally taken aback and shocked by this action,” Garrison said. “We are not used to this kind of lender in the marketplace. … It is hard for me to imagine how some people do business, but it’s the real world.”
 

Garrison

HGCC is affiliated with a private equity group that might see such hardball tactics as a means to charge extra late fees and other costs to boost its return, Garrison said. He said the suit was unnecessary given that the 279-acre Hawthorns Golf & Country Club is on track to refinance the loan or pay it off outright by the end of the year.

Jim Carlberg, a Bose McKinney& Evans partner representing the lender, declined to respond to Garrison’s criticism. But he noted the loan had been due to be paid off a couple of years ago. The club had avoided default by negotiating extensions and forbearance agreements with Textron.

HDG Mansur is the developer of Hamilton Proper, an 850-acre golf community launched in Fishers in 1988. Hawthorns is owned by a separate group of investors, some of them local. However, HDG Mansur and Garrison personally are among the defendants in the suit because they are guarantors on the loan.

HDG Mansur already was entangled in a nasty court battle in New York with a former client that accused it of misappropriating funds. In August, a judge issued a $5.8 million judgment against the developer but put collection on hold as he considers some $20 million in counterclaims brought by HDG Mansur.

The former client, a group of investment funds, said the developer overcharged it for advisory services because it was in “severe financial distress.” The suit alleged that “there is a significant possibility that without their ‘cash grab’ from the funds’ assets, the HDG entities would be unable to continue operating.”

In an unrelated case, the Wirral Borough Council of Great Britain sued HDG Mansur in April, charging it failed to pay more than $900,000 on office space leases in London.

Global ambitions

Back in the 1980s, Garrison and then-partner Lee Alig were among the most prolific developers in the Indianapolis area. Their projects included the $92 million Market Tower and the $20 million redevelopment of Lockerbie Marketplace and $40 million redevelopment of the Omni Severin Hotel.

But after Garrison and Alig parted ways in the early 2000s, Garrison increasingly turned his ambitions overseas. As of 2011, HDG Mansur boasted that it had developed, managed and advised on nearly $5.2 billion in real estate investments on behalf of private clients and institutions worldwide.

Garrison, 65, acknowledges these are not the halcyon days. “Anyone that has been in the real estate industry the last five years has had challenges. I am not going to deny that people have challenges.”

He acknowledged that this also has been a tough stretch for golf course owners, which continue to suffer from a glut of courses developed in the 1990s, when the sport was booming. But he said Hawthorns, with about 500 members, has been among the stronger performers in that difficult sector. In fact, he said, it’s doing well enough that it could pay off the loan outright.

“The Hawthorns has been one of the few clubs in the Midwest that has seen positive membership growth over the last five years,” Garrison said. “The operations of the club have been very positive.”

Textron used to be a heavyweight in golf course lending but announced in 2009 it was exiting the business because of “unprecedented and turbulent changes in the global financial markets.”

It nonetheless stuck with Hawthorns, extending its loan as the club looked for alternative financing. Textron granted extensions or forbearance agreements in January 2011, February 2012, December 2012 and June 2013. Under the final agreement, payments of at least $50,000 plus interest were due through December, at which time the full $4.5 million loan balance was to be due.•