April 21, 2009
By Thomas Grillo
Tuesday, April 21, 2009
One month after the John Hancock Tower was sold at a foreclosure sale, another Back Bay building will be auctioned off.
The owners of 441 Stuart St. have defaulted on their mortgage for the 163,770-square-foot Art Deco building, whose retail tenants include Healthworks Fitness Center and Starbucks.
Gold Associates and VEF Funding purchased the 11-story building in 2004 for $37.5 million and planned to convert the top six floors to luxury condominiums.
But the project stalled after Healthworks filed a lawsuit against the condo conversion. Then the Hub real estate market collapsed.
Corus Bank, a Chicago-based lender that typically loans money for condo conversions held a mortgage of $42 million. On April 28, JJ Manning Auctioneers will handle the sale.
"Every commercial broker in Greater Boston is trying to figure out a way to make money on this transaction because it's a substantial deal," said Justin J. Manning, president of the Yarmouth-based auction company.
But William Motley, managing director at Jones Lange LaSalle, doubts there will be great interest in the property. He said the building lacks curb appeal.
"It's obviously the second-most notable auction in Boston after the Hancock Tower," he said. "But this is a Class B building because it has not had a complete renovation in more than two decades. It's just not a trophy asset."
Dubbed the New England Power Building when it was built in 1927, it features 12,500 square feet of retail space and a 45-car garage. New windows were installed in 1989.
Floors five through 11 are gutted. The new owners could convert the space to housing, hotel or other uses.
Neal Gold of Gold Associates could not be reached for comment.