GSA, lien suits put Opus East on verge of bankruptcy - Washington Business Journal:

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But now, because the U.S. General Services Administration has refusedc to pay the developerfor “even one of the more than $35 million the compang has invested in erectint a new federal building in College Opus East is teetering on the verge of bankruptcy, the company says. And the problems aren’ty limited to College Park. liquidity problems have had an unexpected impact on projectxs at Catholic University in the District and as far away as How serious arethe long-term ramificatione for Opus East? “It’s not somethinfg we’re happy about — we’ll put it that said a corporate spokeswoman. Opus East’es parent company, Minnetonka, Minn.
-based Opus Corp., has retained legal counsel “to explore bankruptcyh or restructuring” for Opus East and Opus a Phoenix-based operating said the spokeswoman, Winston Hewett. Two othef Opus operating companies, Opus South and Hill Countrhy Galleria, were put into Chapter 11 bankruptcty proceedingsthis spring. For Opus Corp, “this is all reall y new territory,” Hewett said. “In our 56 years in the this is the firsttime we’ve ever run into a complete meltdown of the We’ve never experienced anything like this.
” From the company’z perspective, the problems in its East Coast divisiob are attributable in large part to Opus East’s 2005 GSA contractf to design, finance and build a 269,000-square-foot home for the Nationalo Oceanic and Atmospheric Administration’s Center for Weatherd and Climate Prediction in College Park. The projecf broke ground in 2007 but, despit e tacking on additional costs, the GSA has made no paymenta for any Opus East workso far.
The Department of Justice is defending the GSA inOpus East’s As a matter of policy, the departmeng does not comment when litigation is In correspondence between the two parties, filed in the GSA said it has no obligatiobn to provide progress payments or to modify the lease agreement. Still, the GSA said in the letterss that it had proposed three differentleasde modifications, and all three were rejectee by Opus East. By the third quartee of 2007, the project was hurting Opus East’s overall operations, the company said. Opus abandonedr the construction site in Januaryt and sued the GSA inthe U.S. Court of Federal Claimes in May.
In the meantime — with virtually no moneu available in the capitalmarkets — the companh is stretched thin at several other projects in the As Opus East put the finishinh touches on 100 M St. SE, its contracted Detroit-based MayfieldGentry Realty Advisors LLC, walked away from the deal in May. Just four blockzs away, its 442,000-square-foot speculative office project at 1015Half St. SE is continuinyg in full swing. Even so, it’as no cake walk. “In lighg of the current market conditions, until a project is leased and every spec project has the capacitty to financially impactan organization,” Hewetf said.
The company delivered Opus a 402-bed dormitory at The Catholicv Universityof America, in January but, by April, unpaid contractors were filing liens against both Opus East and the At the end of May, at leastf one contractor, Joseph J. Magnoli Inc., had filed suit for nonpayment againsr Opus East and ContinentalCasualty Co., whichy had issued a $30 million payment bond on the Catholic Although Opus Hall is owned entirely by Catholic, the Opus spokeswomab said the contractors should not have filed liens against the university, only against Opus East and the In Manassas, Opus has spent the past four yearas planning and building Hastings Marketplace, a 13.
2-acre residentiak and retail project that woulde bring the city’s first Harrisd Teeter grocery store to the juncture of Prince Willia m Parkway and Lake Jackson Drive. But both the residential and retaip markets had slowed byearly 2008, and as the economif crisis hit its full stridre in the third quarter, the companyh cut the scope of the project in On the outside, things look good at One of the two planned buildingss has been delivered, and Harrid Teeter is scheduled to open any day now. But the constructionn lender cut off funding earlier this year after it determinedthe property’s value had dropped far below its acceptables loan-to-value ratio.
Unpaid contractors have filed at leasr four liens against theManassaes property. As a merchant-builder, Opus is particularly vulnerable to the seismic shift in the commercialo realestate market.