RALEIGH — William Peace University, which last fall welcomed its first coed class of students, is interested in buying the adjacent Seaboard Station retail center that has been mired in bankruptcy for more than a year.
The university’s interest has alarmed Seaboard tenants and residents in the surrounding Mordecai and Oakwood neighborhoods who fear William Peace would ultimately close the center and use the land for student parking, dormitories or activity fields.
Several Seaboard tenants learned of the university’s interest last month after attending a bankruptcy hearing in Raleigh. During the hearing, a lawyer for William Peace made a statement to the court that the university was willing to make an offer for all or part of the Seaboard land.
“When he stood up and said that our jaws all hit the floor,” said Bob King, owner of the Ace Hardware store in Seaboard. “ ... We all just stood there in amazement and said uh-oh, we’ve got a problem.’”
William Peace officials declined to comment Monday beyond a one-sentence statement saying that “we understand that there are several parties interested in (Seaboard Station), including William Peace University.”
Last week, the university’s president, Debra Townsley, sent an email to a member of the Society for the Preservation of Historic Oakwood that was vague about the WPU’s intentions.
“You are absolutely correct that if we ever acquired the Seaboard Station property, it would be income producing with the wonderful tenants that exist,” Townsley wrote. “The retail space benefits William Peace University students and employees with great places to eat, run errands, shop, etc.”
The irony for Seaboard Station tenants is that the retail center’s messy bankruptcy proceedings are taking place when its prospects have never seemed brighter. The 92,000-square-foot center is more than 90 percent leased to such tenants as Tyler’s Taproom, O2 Fitness and the pet supply store Phydeaux.
“We have put our personal fortune into this thing and it has now turned the corner and we’re faced with this hurdle,” said King, noting sales at his store were up 23 percent last year.
Seaboard’s owner, Gregory & Parker, is one of the many commercial real estate owners that ended up in bankruptcy after being unable to refinance its loans once property values dropped. Such filings are both a protective maneuver to avoid foreclosure on an income producing property, and a way to put pressure on lenders to negotiate.
But Gregory & Parker and its lenders have been unable to agree on a repayment plan. Last month the company’s creditors sought to dismiss the case or convert it to Chapter 7, which would allow Seaboard to be sold. The attorneys for Regions Bank, which is the largest creditor with a claim of more than $19 million, said in a filing that the company’s repayment plan is not feasible.
Regions motion was denied this month, allowing Gregory & Parker more time to come up with a repayment plan.
That William Peace is interested in acquiring Seaboard isn’t all that surprising.
“Those guys are landlocked,” notes David Warren, a bankruptcy lawyer at Poyner Spruill in Raleigh. “Any school that has an opportunity to buy adjacent land – they jump on it. I don’t think these guys are any different.”
The university’s enrollment rose to 791 in the fall of 2012, an increase of 9 percent over the previous year, and Townsley has said her goal is to expand enrollment to 1,000.
At the bankruptcy hearing last month, Doug Diesing, owner of Seaboard Wine, said William Peace’s attorney told the court that the university was looking for more space for both student parking and activity fields.
Diesing said one of the aggravating things about the current situation is that Seaboard isn’t for sale.
“The owners of the property have made it very clear to the bankruptcy court and to the tenants down here that they want to keep this property,” he said.
If the property is ultimately sold, Diesing and other tenants want to make sure that other interested buyers beyond William Peace are allowed a chance to make offers.
Several other nearby businesses and property owners are also likely to have a decided interest in Seaboard remaining a retail center. Logan Trading Company, whose owners also attended last month’s hearing, rely on Seaboard for parking, and York Properties has just finished renovating a 15,000-square-foot retail center at 111 Seaboard Ave.
For the surrounding neighborhoods, the concern is that they will lose one of their key amenities.
“Seaboard provides a business district that’s walkable,” said Reid Serozi, communications chair for the Mordecai Citizens Advisory Council. “People choose to live in downtown Raleigh, especially the Mordecai community, because of the walkability to local businesses.”
Serozi said many neighbors also don’t completely trust William Peace after the way it dealt with the closing of Franklin Street a decade ago. Neighbors sued in 2003 after the city agreed to close part of Franklin Street for then-Peace College’s expansion, a lawsuit they lost.
“There was no compromise and the university moved forward with it even though the majority of the neighborhood was against it,” Serozi said. “I think there’s a level of trust that needs to be rebuilt.”
Staff writer Anne Blythe contributed.