Remnants of failed Premier Properties finally hit market

Before Premier Properties USA Inc. imploded last year, the firm amassed some solid local holdings: the Metropolis mall
in Plainfield, two Class A office buildings at Woodfield Crossing, and a prime development parcel near the Fashion Mall at
Keystone.

But most of the firm’s properties, including Metropolis and the site of Premier’s proposed
Venu development, have remained in a state of limbo for months as various firms try to determine what they are worth and sort
out a maze of lenders hoping to recoup lost equity.

In recent months, most of the first-mortgage holders have
taken control from secondary lenders and the properties finally are hitting the market for sale. CB Richard Ellis began marketing
the most prominent of Premier’s local properties, Metropolis, this month. The brokerage firm is offering the existing
mall and adjacent undeveloped land in four separate parcels, without asking prices.

The Venu site at the southwest
corner of East 86th Street and Keystone Avenue also is up for grabs. And two other local Premier-developed retail centers
have sold this year: the Value City-anchored Plainfield Crossing retail center went to Columbus, Ohio-based Schottenstein
Real Estate Group, and a small strip at the entrance to Metropolis went to GDA Real Estate Services of Greenwood Village,
Colo.

White

Unwinding Premier since its bankruptcy filing a year and a half ago has been particularly challenging,
in part because Premier’s deals were complex and used several lenders. Premier founder Christopher P. White took on
daring projects with little margin for error, often in unproven retail markets like Plainfield. He also developed ambitious
projects in Ohio, Pennsylvania and Nevada.

When credit markets tightened, White’s luck ran out.
His company filed for Chapter 11 bankruptcy in April 2008. A month later, a judge converted the case
to Chapter 7 and ordered the company be liquidated.

White, 52, was sentenced Nov. 18 to
one year of home detention and three years of probation in connection with a $500,000 bad check he wrote
last year as he tried to save Premier Properties.

Most of Premier’s deals included
financing from so-called mezzanine lenders, which kicked in equity that evaporated as property values fell.
The secondary lenders have taken massive losses on the projects.

Other complicating factors include declining
property values and a still-stingy lending market in which even the most capable of potential buyers and the most attractive
deals have trouble landing financing.

Complex process

Several real estate firms including CB Richard Ellis, Colliers Turley Martin Tucker and Grubb & Ellis Harding
Dahm & Co. are handling the disposition of various Premier properties, in many cases as court-appointed
receivers. Their mission: Maintain the properties, recruit new tenants and ultimately prepare them for
sale.

“This is a highly complex process that takes a significant amount of expertise,”
said Gordon Hendry, director of asset services in the local office of CB Richard Ellis.

In the case of Metropolis and the Woodfield Crossing office buildings, the first-mortgages were funded
through commercial mortgage-backed securities, or CMBS, which bring together pools of hundreds of mortgages. That’s
when it gets really complicated.

Take the Woodfield Crossing II and Woodfield Crossing III office buildings.
The mezzanine lender, Arbor Commercial Mortgage, foreclosed on Premier Properties in a bid to recoup its investment. But Arbor
realized the buildings weren’t worth enough to pay back both the first-mortgage holder and its own position, so it elected
to give up control of the property instead of investing more money.

Now, New York-based Centerline Capital Group
is operating the Woodfield buildings on behalf of the CMBS pool that holds the first mortgage, said Tim Michel, a senior vice
president in the local office of Colliers Turley Martin Tucker.

CTMT, which has been appointed receiver for the
office buildings, is handling leasing and management. The firm is the third in two years to handle leasing of the five-story
office buildings. Halakar Properties Inc. handled leasing for Premier, and NAI Olympia Partners took over for Arbor.

The mezzanine lender for Metropolis, Dominion Capitol Management, foreclosed on Premier in mid-2008 and brought in
CB Richard Ellis to manage the open-air lifestyle mall in Plainfield.

But Dominion defaulted at the end of 2008
and the properties headed to receivership. CB now is handling two Metropolis receiverships, one that includes most of the
Metropolis shopping mall and a couple of office/retail buildings, and the second covering office buildings and outlots including
Claddagh Irish Pub, Hendry said.

The first-mortgage holders are Midland Loan Services Inc. (part of Pittsburgh-based
PNC Financial) on behalf of CMBS investors and Hypo Real Estate Holding of Germany.

Hendry said the properties
have received “good interest” from potential buyers.

Venu outlook

The now-vacant Woodfield Crossing retail building at the southwest corner of 86th and Keystone also is on
the market. Listing agent Grubb & Ellis Harding Dahm & Co. is marketing the 6.4-acre site as a redevelopment opportunity,
albeit on a far smaller scale than Premier had envisioned.

Premier bought the center and several nearby properties
in 2007 to make way for its proposed $750 million juggernaut called Venu. The plans called for hotels, office space, a theater
and a shopping center as large as the Fashion Mall at Keystone. It even called for a retractable roof so it could attract
shoppers in all weather conditions.

Potential buyers are saying retail space along 86th Street with apartments
behind would make sense, said Scot A. Courtney, Grubb’s director of retail services.

The center’s
owner, Jacksonville, Fla.-based Everbank, is willing to consider separating the site into multiple parcels, Courtney said.
The asking price for all of it is $6.75 million.

The 58,000-square-foot building will remain vacant until it
sells since it was badly damaged by a pipe burst last winter after months without maintenance.

“There’s
a lot of interest,” Courtney said. “It’s still pretty hard to beat being at 86th and Keystone.”

Premier founder Christopher P. White apparently agreed. As he assembled land for Venu a few years ago, he also bought
a development site across 86th Street that the city already had approved for condos and a Whole Foods Market.

The 13-acre site remains in limbo. It was one of dozens of real estate holdings held by Columbus, Ind.-based Irwin Union Bank,
which failed in September. A spokeswoman for Irwin’s new owner, Cincinnati-based First Financial Bancorp, declined to
say whether her bank or the FDIC now holds the note

Premier’s properties are well-positioned and should
find buyers once all the conflicts among lenders are worked out, said Todd Maurer, president of Halakar.

“Nobody
wants these properties until they have clean titles,” he said.•