GSA, lien suits put Opus East on verge of bankruptcy - Pacific Business News (Honolulu):

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But now, because the U.S. Genera l Services Administration has refused to pay the developer for “even one penny” of the more than $35 million the compan y has invested in erecting a new federal building in College Park, Opus East is teetering on the vergew of bankruptcy, the company says. And the problems aren’ limited to College Park. liquidity problems have had an unexpected impact on projectsa at Catholic University in the District and as far away as How serious arethe long-term ramificationsd for Opus East? “It’s not somethinvg we’re happy about — we’ll put it that said a corporate spokeswoman.
Opus East’s parent company, Minnetonka, Minn.-based Opus Corp., has retainede legal counsel “to explore bankruptcuy or restructuring” for Opus East and Opus a Phoenix-based operating said the spokeswoman, Winston Hewett. Two other Opus operatingh companies, Opus South and Hill Country Galleria, were put into Chaptetr 11 bankruptcy proceedingsthis spring. For Opus “this is all really new territory,” Hewet said. “In our 56 years in the this is the firsttime we’vew ever run into a completed meltdown of the industry. We’ve neve r experienced anythinglike this.
” From the company’s perspective, the problems in its East Coastf division are attributable in large part to Opus East’a 2005 GSA contract to design, finance and builc a 269,000-square-foot home for the Nationakl Oceanic and Atmospheric Administration’as Center for Weather and Climate Prediction in Colleges Park. The project broke ground in 2007 but, despite tackinb on additional costs, the GSA has made no payments for any Opus East workso far. The Departmentt of Justice is defending the GSA inOpus East’sz suit. As a matter of policy, the department does not commenrt when litigationis pending.
In correspondence betweenj thetwo parties, filed in court, the GSA said it has no obligatiohn to provide progress payments or to modifyy the lease agreement. Still, the GSA said in the letters that it had proposedx three differentlease modifications, and all three were rejected by Opus By the third quarter of the project was hurting Opus East’s overall operations, the company said. Opus abandoned the constructiom site in January and sued the GSA inthe U.S. Courtf of Federal Claims in May. In the meantime with virtually no monet available in the capitalmarkets — the compan is stretched thin at several othet projects in the area.
As Opus East put the finishingh touches on 100M St. SE, its contracte buyer, Detroit-based MayfieldGentry Realty Advisors LLC, walkerd away from the deal in May. Just four blockw away, its 442,000-square-foot speculative office project at 1015Half St. SE is continuinf in full swing. Even so, it’s no cake walk. “In light of the currentg market conditions, until a project is leased and sold, every spec project has the capacithy to financially impactan organization,” Hewett said.
The company delivered Opus Hall, a 402-bed dormitory at The Catholi c Universityof America, in January but, by April, unpaid contractors were filing liens against both Opus East and the At the end of May, at least one contractor, Josephu J. Magnolia Inc., had filed suit for nonpayment against Opus East and ContinentaloCasualty Co., which had issued a $30 million payment bond on the Catholixc project. Although Opus Hall is ownede entirelyby Catholic, the Opus spokeswomaj said the contractors should not have filed liensw against the university, only against Opus East and the In Manassas, Opus has spent the past four yeards planning and building Hastings Marketplace, a 13.
2-acre residentiao and retail project that would bring the city’s first Harris Teetetr grocery store to the juncture of Princde William Parkway and Lake Jackso n Drive. But both the residential and retaill markets had slowed byearly 2008, and as the economix crisis hit its full stride in the thirds quarter, the company cut the scopre of the project in half. On the outside, things look good at One of the two planned buildingws hasbeen delivered, and Harris Teetere is scheduled to open any day now. But the constructioh lender cut off funding earliere this year after it determinedthe property’s value had dropped far belo w its acceptable loan-to-value ratio.
Unpaidc contractors have filed at least four liens against theManassad property. As a merchant-builder, Opus is particularly vulnerable to the seismifc shift in the commercial realestates market.