Judge says widow of downtown St. Paul’s largest building owner is on the hook for loan

A Ramsey County District Court judge on Monday ruled that the widow of the founder of Madison Equities, downtown St. Paul’s largest property owner, owes a bank more than $2 million for a commercial loan she personally guaranteed.

The order came one week after the lender that recently foreclosed on the Lowry Apartments separately filed a lawsuit against Jim Crockarell’s widow, Rosemary Kortgard, saying she owes more than $8 million as a guarantor of the property’s mortgage.

The legal moves raise more questions about the future of Madison Equities’ real estate portfolio, which includes some of the most recognizable buildings in St. Paul’s skyline. Though each property is held under a separate subsidiary company, Kortgard listed six office buildings, two parking ramps and a restaurant for sale all at once in April, with the unlikely goal of finding a single buyer for the entire package.

Madison Equities is not alone in its woes. Across the country, office buildings are bleeding tenants due to the rise of remote work, leaving many property owners unable to pay off debt becoming due. That’s led to a rash of foreclosures and discount sales.

Kortgard’s situation could get more complicated if additional creditors emerge and race to recoup what they’re owed.

“Situations like this are not shocking with the pandemic and changing state of commercial real estate,” said Edward Adams, a finance and law professor for the University of Minnesota Law School. “So what’s your way out as a borrower? You can refinance if you can find a lender. Or you may end up in personal bankruptcy.”

Wisconsin-based Pillar Bank was the first to secure a judgment against Kortgard. At issue was a $2 million loan for the Park Square Court building that was not repaid by its maturity date. The lender filed its complaint against Kortgard, Crockarell and two affiliated companies in October 2023.

Those affiliated companies filed for Chapter 7 bankruptcy in June, halting efforts to collect money from them. But the protections do not extend to Kortgard or Crockarell’s estate, according to the 12-page order from Judge Patrick Diamond, who said Pillar Bank must submit a request for how much it is owed in interest, attorney fees and other costs.

Attorneys for Kortgard and Pillar Bank did not respond to requests for comment.

In an 11-page complaint filed Sept. 9, after using $7 million of the credit it’s owed to acquire the Lowry Apartments through a foreclosure sale, lender Colliers Funding argued Kortgard is liable for remaining debt associated with the building as a guarantor.

The lawsuit seeks more than $8 million plus interest, late charges, attorney fees and other costs. An attorney for the lender did not respond to requests for comments.

The court appointed a receiver to take over management of the Lowry Apartments last month after tenants complained that the building was unsafe and unsanitary. Other Madison Equities properties have lost major office tenants in recent months, and an attorney for the company warned large buildings could soon be boarded up and left without security.

Madison Equities did not pay the first half of this year’s property taxes on its downtown buildings. The company owes at least $1.7 million in taxes, fees and penalties, and at least $1.6 million more will be due in October.

Crockarell, who died in January, was a controversial figure in downtown St. Paul, engaging in a number of legal battles over decades with the city, other property owners, his tenants and his staff. As he amassed his portfolio, he grew a reputation for buying distressed buildings and offering below-market rents. Kortgard, an attorney, was a business partner.

“It was a hedge-fund version of real estate in St. Paul,” said John Mannillo, a longtime downtown developer who had clashes with Crockarell. “He wasn’t investing in anything. He was taking out what he could.”

“It’s not clear that anybody’s going to give half a decent price for anything,” he added. “I would not be surprised if she just declares bankruptcy.”

Filing for personal bankruptcy can protect certain assets, like a home, depending on an individual’s situation and the type of bankruptcy. It can also temporarily halt other litigation against the debtor.