Madison Equities relinquished three buildings to lenders this month, but downtown St. Paul’s largest property owner is far from untangling itself from its debt-ridden real estate portfolio.
Earlier this month, in lieu of the foreclosure process, a Madison Equities subsidiary sold the Degree Apartments to lender Minnwest Bank for $9.5 million, according to public real estate filings. The bank previously argued in court that Madison Equities owed $12 million plus interest for a construction loan in default.
A different lender, Merchants Bank, purchased the Empire Building and adjacent Endicott Arcade at a sheriff’s sale Thursday, using $1.3 million of credit owed on the properties’ mortgage.
A third, First Interstate Bank, filed a complaint last month seeking $24 million owed on the mortgage of the 32-story U.S. Bank Center. The lender is also asking the court to appoint a receiver to protect the value of the building while it goes through the foreclosure process.
Kelly Hadac, an attorney for Madison Equities, declined to comment on the litigation.
The company’s founder and longtime principal, Jim Crockarell, died early this year, leaving more than a dozen St. Paul properties to his wife, Rosemary Kortgard. Crockarell grew his empire through decades, purchasing some of downtown’s most recognizable office towers.
The COVID-19 pandemic and rise of remote work dealt a blow to office buildings across the country, particularly older ones in need of upgrades. Madison Equities subsequently lost several corporate and government tenants who downsized or moved.
With debt payments looming, Kortgard listed the company’s entire downtown office portfolio in April, in the unlikely hope of finding a buyer who would take the lot off her hands for a bargain price. No such figure emerged, and some lenders are moving to cut their losses.