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The owner of the Circle Tower office building on Monument Circle allegedly has defaulted on a loan secured for the property during the pandemic, setting in motion foreclosure proceedings on the property.
Merrillville-based Centier Bank filed a lawsuit on on Friday in Marion County Superior Court against Chicago co-working company Expansive, which bought the 14-story art deco building in 2017 through holding company 55 Monument Circle Level Office LLC.
A spokesperson for Centier declined to comment on the lawsuit. A representative for Expansive did not return a message sent through the company’s website requesting comment Monday night.
In its lawsuit, Centier alleges Expansive has fallen behind on payments for a $13.5 million loan secured for the property in July 2020, and has failed to maintain adequate communication with the bank about operations as required in loan documents. The company owes about $12.94 million on its loan, according to suit.
While sparse on details, Centier’s foreclosure suit alleges Expansive has failed to make payments as required; provide quarterly business financial statements; provide an extended business tax return; and maintain adequate debt service coverage ratios. It also claims that a “material adverse change has occurred” with Expansive, but did not elaborate.
Centier said in its filings it is exercising an option in the loan to require Expansive to pay the entire balance on the loan, along with accrued unpaid interest and other costs associated with the collection of the debt.
The bank also has requested the appointment of a receiver to take over operations of the Circle Tower building.
Expansive bought the 111,000-square-foot building in January 2017 from Indianapolis-based Ambrose Property Group at a price of $11.65 million, with plans to renovate part of the building to offer as co-working space in the structure.
The company told IBJ in 2017 that it ultimately planned to devote 25 percent of the building to co-working space. It wasn’t immediately clear Tuesday morning how much of the building is now devoted to that use, but Expansive’s website said office suites, private offices, conference rooms, dedicated desks, and co-working spaces were available at the tower.
Ambrose vacated its space in the building during the pandemic to move its offices to 8888 Keystone Crossing. Tech-focused venture capital firm High Alpha, also a tenant in the building, relocated to Bottleworks District in the Mass Ave area.
The Indianapolis architectural firm Rubush & Hunter designed the office and retail building—known for its Egyptian-inspired design details and ornate lobby with marble walls and terrazzo floors. Built in 1930, the structure features a stepped-back façade that’s designed to avoid casting a shadow on the Soldiers and Sailors Monument. It’s in the southeast quadrant of the Circle.
According to its website, Expansive has 45 locations—43 of which it owns directly—in 34 cities across the United States. Those spaces account for 3.8 million square feet of co-working space.
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Let’s hope the city of Indianapolis doesn’t step up and bail them out like they have done for Kite on the Signa Hotel!
Except, that’s not what happened with the Signa.
Spark will save it!
The city was between a rock and hard place on the Signa Hotel and convention expansion. The 3 largest conventions that come to the city end several new ones wouldn’t sign extensions unless the hotel and convention expansion happened. The other hoteliers didn’t have an alternative so the city had to act. The private sector couldn’t could favorable rates on loans so it wasn’t feasible for Kite or any developer. Indy would have surly lost major conventions to its peer cities like Nashville and even Louisville. White Lodging and other hoteliers are crying the Hilton would saturate Indys downtown market and that the city isn’t big enough to support more hotels when that’s not true. It’s obvious that the current hotel supply wasn’t enough to keep major conventions so the city had to act to save the hospitality industry in the city. No brainer
Kevin, so you are saying the city built a hotel for 9 days of the year while it struggles the remaining 356 days? The math doesn’t seem to work out but you are the brains on this subject.
I’m not sure why you think the hotel will struggle the other 356 days of the year. It’s unfortunate that this project couldn’t be financed privately due to the pandemic and inflation following it, but that doesn’t mean the hotel will struggle meeting revenue projections. This also isn’t just about keeping three conventions. It’s going to allow the convention center to attract more large conventions. People made the same complaints when the Marriott Complex (JW, Courtyard, SpringHill, and Fairfield) was built, and that ended up bringing rates and occupancy up for every downtown hotel after a few years.
Don’t worry, Wesley–this hotel won’t struggle because that would be incredibly bad press for the administration and would suggest that it was a poor decision.
As other people here have noted, this hotel will get enough subsidies to artificially deflate its nightly rates, giving it a powerful competitive edge. And then the press–who has abdicated its responsibility of questioning government corruption and abuse of power–will write glowing pieces of what a soaring success it is. Meanwhile, at least one hotel that doesn’t get this public-sector boost will be unable to compete, and unless the convention industry enjoys an unexpected boom, those non-subsidized hotels that are lowest on the totem pole will fail.
Co-working spaces seemed like the next big thing back in 2017 when Expansive secured this loan. They aren’t anymore. Sure, some succeed, but they have to be hyper-competitive and the last three years of unnecessary COVID lockdowns weren’t kind to this niche commercial concept–the lockdowns weren’t kind to office real estate in general.
Well said Lauren.
Sorry Lauren, but you don’t have any evidence to back up your claims. I worked in hotel revenue management, so I understand quite a bit on how the industry works. There’s literally no way for either of us to definitively say anything, but hopefully you’ll still be around commenting when the hotel is open and we’ll see who’s theory is correct.
My educated guess (based on actual relevant experience) is that this hotel will have higher rates than the JW has currently. I’d expect it to be one of the highest priced hotels in the market. If this hotel opens and the average daily rate (ADR) for Downtown hotels goes down compared to the year prior to it’s completion (not counting a major economic downturn), you will be correct and I’ll be wrong. I’m fairly certain you’ll be wrong though. It will likely cause a slight dip in occupancy during off-peak nights the first few years it’s open, but that really doesn’t effect revenue severely in a market driven by major events.
Whether or not the city should be financing a hotel is up for debate. I can see both sides of that issue. Now that it’s already a done deal, there’s no point in debating that. I just know you have zero evidence to back up your claim that this hotel will artificially decrease prices. On nights with major conventions, Downtown hotels are all sold out and this new hotel won’t be enough to change that. On off peak nights, hotel revenue managers don’t just tank rates to sell rooms. It’s better to keep your ADR higher and have empty rooms. There’s a baseline bottom rate that hotels will drop to at times of extremely low occupancy, and I’d expect that number to be higher for this hotel than the JW. If it’s not, congratulations, you win the argument. Time will tell.
“Three years of unnecessary Covid lockdowns”? Just where in Indianapolis did that happen, Lauren?
Just about every parking garage Downtown was built by the City or with City TIF funds but none of the developers who were aided by those subsidies were crying like these hoteliers. Eye of the beholder…
Hmm… the article is entirely about the Circle Tower, an office building, but everyone is talking about hotels.
I’ve long wondered whether the Circle Tower should be repurposed. It is such a grand building, but one that needs a good, thorough restoration. Condominiums? Boutique hotel? Parking is a key issue, though I would have to think that an arrangement could be made with the adjacent garage. Likewise, the floorplans may be somewhat awkward as one side faces the said garage while others face the internal central “light court.” I hope someone with means and vision can help the building become a jewel on the Circle once again.
Or…maybe Centier can keep it, make it their Indy HQ, and lease out the second floor to Del Frisco Steakhouse now that they’re returning to town!!😂