A bankruptcy court judge has approved the sale of the Seaboard Station retail center in Raleigh to William Peace University for $20.75 million.
The order, signed late last week, allows the university to move ahead with its plan to invest nearly two-thirds of its $33 million endowment to acquire the center. No higher bidders emerged during the sale process.
Seaboard’s owner, Gregory & Parker, filed for bankruptcy in February 2012 after being unable to refinance its loans. The retail center was put up as collateral for loans Gregory & Parker used to invest in numerous properties, and the company’s lenders repeatedly rejected its repayment plans.
After several tough years, Seaboard is now thriving, with more than 90 percent of its 92,000 square feet leased to such tenants as Tyler’s Taproom, O2 Fitness, 18 Seaboard, Ace Hardware and the pet supply store Phydeaux.
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William Peace’s acquisition of Seaboard has raised concerns among some of the center’s tenants and residents in the surrounding Mordecai and Oakwood neighborhoods. They fear the university, which is landlocked and seeking to increase its enrollment, will ultimately close the center and use the land for student parking, dormitories or activity fields.
Some of the university’s donors and alumnae also worry that investing so much of the school’s endowment in a single real estate project carries too much risk.
But university officials have said that William Peace’s intention is to retain Seaboard’s retail space. The school believes the returns it will get from owning Seaboard will be comparable to those it would get by investing the money elsewhere. Officials also say the school will benefit in other ways from owning an asset that its students frequent daily.
“William Peace University is committed to the local community and should we acquire the property, we would work with the community in a positive way to enhance its value to the city and beyond,” the school said in a statement Wednesday. “We are committed to our neighbors and want the area to be the best place to live, work and go to school.”
The decision to purchase Seaboard was approved unanimously by William Peace’s trustees. University officials have declined to say how exactly the transaction will be made, citing a confidentiality agreement that the school was required to sign while the property was in bankruptcy court.
William Peace outbid several other experienced retail operators to put the property under contract. The Seaboard property had liens against it of more than $20 million. The largest creditor was Regions Bank, which was owed $19 million.