If there’s a single property that reflects the tangled mess that former Duke basketball stars Christian Laettner and Brian Davis’ real estate empire has become, it is the Chesterfield building in downtown Durham.
Although Laettner and Davis turned over the property to avoid foreclosure in November 2009, it remains the unsettled piece of the duo’s West Village development. And the cast of characters that will now decide the building’s fate reflects just how much Laettner and Davis relied on their sporting relationships to fuel their real estate ambitions.
The latest twist in the Chesterfield saga is that Cleveland-based BGL Real Estate Advisors is now in discussions with the building’s owner to redevelop it. BGL has replaced local developer Josh Parker’s group, Chesterfield Partners, which spent nearly two years trying to line up funding to transform the 360,000-square-foot, six-story tobacco warehouse into a mix of office, retail and apartments.
A BGL executive didn’t return a call seeking comment about the company’s interest in the Chesterfield. But the firm’s involvement is hardly surprising.
One of BGL’s directors is Anthony Delfre, who was previously a personal financial adviser to Laettner, according to a lawsuit filed by a spurned investor of Laettner’s and Davis’.
BGL has also advised Laettner’s West Village ownership groups on two recent deals they struck with Federal Capital Partners. Federal Capital Partners acquired West Village’s first phase late last year and took a controlling interest in the project’s second phase with a $5 million investment in August.
Laettner, who didn’t return a call seeking comment, also has a professional connection to the current owner of the Chesterfield, Glen Taylor. Taylor is the majority owner of the Minnesota Timberwolves, the NBA team that drafted Laettner in 1992 and for whom he played his first three seasons in the league.
Taylor, whose net worth was pegged at $1.7 billion in September by Forbes, became the owner late last year, but his involvement goes back further.
In November 2008, an entity of Taylor’s took a 70 percent interest in a $10 million promissory note that Select Capital Management made to Laettner earlier that same year. The Chesterfield secured the loan.
According to court records, two other professional athletes provided money for the loan: JaMarcus Russell, the former Louisiana State University quarterback who was the No. 1 pick in the 2007 NFL draft, provided $2 million; and Calvin Pace, a linebacker for the New York Jets, invested $1 million.
The terms of the promissory note were onerous to say the least. The interest rate was 12.25 percent, and Laettner was to repay the entire amount in six months. Laettner also executed a subordinate deed of trust on his home in Ponte Vedra Beach, Fla., as further protection for the lender against default.
Laettner did default and eventually handed over the deed to the Chesterfield to Select Capital. That was before the Securities and Exchange Commission filed a complaint accusing Select Capital and its founders of defrauding investors of more than $50 million through several schemes, including bogus corporate bond offerings.
Late last year a judge approved an order transferring ownership of the Chesterfield to a Taylor-related entity. That entity has the same address as Northland Securities, a Minneapolis-based brokerage firm, according to corporate records on file with the N.C. Secretary of State’s Office.
Northland Securities is a subsidiary of Northland Capital Holdings, which Taylor is an investor in as well as a member of its board of directors. The Northland official listed on the corporate records didn’t return a call seeking comment.
It’s likely that Taylor, after taking ownership of the property, simply put the project back out for bid and that BGL outbid Parker’s group. Parker declined to comment, other than to say he remains interested in projects in Durham, with the Chesterfield at the top of that list.
As for whether BGL’s arrival on the scene will result in the project finally moving ahead, that remains to be seen. It’s possible that BGL could cut another deal with Federal Capital Partners, which surely has an interest in the property and would likely be able to bring some capital to the table.
The Chesterfield is now the only property in West Village that Washington-based Federal Capital Partners doesn’t control.
BGL’s plans for the building include some retail on the first floor, parking and commercial office space, said Bill Kalkof, president of Downtown Durham Inc. He said one potential hiccup is that BGL must start construction by Jan. 1 or it loses the building permit and site plan that have been approved for the project.
Duke still involved
Another key player in the deal will be Duke University, which would likely be one of several tenants in the building. Duke has had ongoing discussions with Parker and others over the years about taking space in the Chesterfield, and the university is now in talks with BGL, confirmed Scott Selig, associate vice president of Duke’s real estate office.
“We’re still in those discussions,” he said. “There’s certainly no agreement yet.”
Selig said that while Duke definitely wants to be a part of the project, its commitment alone won’t get it financed.
“It’s such a large building and with the new financing requirements after 2008 it makes the building much more difficult to finance,” Selig said. “You have to have a larger commitment on pre-leasing of space to make that work.”
As for Laettner, who continues to be hounded by creditors, it certainly can’t hurt his interests that BGL is now involved in the deal. After the two other West Village sales closed, BGL put out press releases touting the firm’s involvement.
“This was a highly complex, structured transaction that could only have been consummated with the tireless efforts of Anthony Delfre and the entire real estate team at BGL,” Laettner was quoted as saying in one of the releases.