Troubled syndicator Kenny Wolfe has yet to lasso his first office-to-residential success.
Meanwhile, the foreclosure filings keep rolling in.
The Dallas-based Wolfe faces foreclosure on 41 Marietta Street, an Atlanta office building slated for residential redevelopment after he and frequent collaborator Bluelofts defaulted on a $20 million mortgage, the Atlanta Journal-Constitution reported. The auction is scheduled for May 7.
The developer, who previously focused on multifamily deals, fielded a second foreclosure suit this month after he defaulted on the debt tied to an apartment building in the Cleveland suburbs this month. He has already lost a multifamily building at auction this year.
“You and The Real Deal know better than most that every city’s real estate market and the banking/finance environment are changing rapidly. This has been challenging for every company in the real estate industry,” said Wolfe Investments spokesperson Christine Groffie.
Wolfe has already lost two office buildings to foreclosure this year, plus an apartment complex, and has been named in six foreclosure filings, all told.
The syndicator made the ambitious jump to office-to-residential projects in 2020, taking on seven projects in three cities over four years.
Many of his conversions have not wrapped construction. The building closest to the finish line, The Bell in Cleveland, is slated to open this summer. As of late March, its leasing office was not answering calls.
The two office-to-residential projects Wolfe has already lost include a project in Dallas and another in Fort Worth.
The former at 211 North Ervay fetched $8 million — a mere $42 per square foot — at a foreclosure auction in February. Wolfe had planned to turn the building apartments before he defaulted on a $13.2 million loan from Thistle Creek Capital.
The deed to the Oil & Gas Building in downtown Fort Worth also went back to Wolfe’s lenders earlier this year. Both properties were purchased in partnership with Bluelofts and slated for resi conversions.
Wolfe and Bluelofts bought that 135,000-square-foot building in 2021 with plans to convert the 48-year-old building into apartments.
The recent Cleveland apartment foreclosure, filed by New York-based lender Flagstar Bank, comes after Wolfe defaulted on a $4 million mortgage, according to court documents. Wolfe acquired 126-unit Euclid Tower Apartments in 2019 with fellow syndicator Agostino Pintus, who’s based in Akron. The property is located at 25400 Euclid Avenue.
In its April 3 lawsuit, Flagstar asks the court to appoint a receiver.
This is the second foreclosure against the property. Saluda Grade Mortgage alleged Wolfe defaulted on a separate $6.5 million loan tied to 25400 Euclid Avenue. The lender sued Wolfe for default in January. Wolfe responded on April 15 and asked the court to dismiss the claims; the suit is still pending.
Wolfe is also at risk of losing the MacArthur Apartments in Oklahoma City. J.P. Morgan Chase claimed Wolfe defaulted on a $4.3 million mortgage in a November 2023 lawsuit. The lender asked the court to appoint a receiver.
The deed to Windsor Senior Living Dallas returned to Springfield, Missouri-based lender Legacy Bank & Trust in February. Wolfe had secured a $12.3 million mortgage for the property from Legacy Bank in 2023.
Wolfe is also trying to divest of another building the old-fashioned way.
Wolfe and Pintus recently listed the Rockefeller Building in Cleveland, Crain’s Cleveland reported. CBRE is brokering the sale.
Wolfe isn’t the only Texas-based syndicator facing foreclosures after scooping up properties in the boom between 2019 and 2022. GVA, Elevate and A&R Multifamily have also lost properties acquired at that time.