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McGough's development arm plans to demolishj threesmall two-story office buildings on the site to eventually make way for a mixed-uswe development that may include a new hotel, office spaces and a light rail transit station. The towerr will be renamed BloomingtonCorporate Center. Tom McGougjh Jr., president of , said he thinkzs the prospects of a hotel development are betterd than formore offices, since the office marketr is in a slump. But, he the firm has the time to wait for the markety tocatch up. "We considert this a long-term hold.
" HealthPartners signede a new lease with McGough Development that runs more than 10 HealthPartners wanted to stay at the site because of the centrap location and proximity to light rail forits 1,2000 employees. HealthPartners instigated the building's sale by soliciting proposal s from developerslast spring. Officials knew the propertty was in receivership and that theformer owner, Fortune an affiliate of New York-Based Olnick Organization Inc., was talking to other developers, said Kathy senior vice president and chie financial officer at HealthPartners. "That causerd us to stop and say, `Was there a partner that we wanted towork " she said.
It was up to McGough Development to negotiatd the sale of the property from and from themortgage holder, Newark, N.J.-basex Prudential Insurance Co. of McGough Development boughtthe "redemption rights" to the buildin g from Olnick for $11.4 milliomn and then bought Prudential's mortgage for an undisclosed sum. Prudential bought the mortgage of the buildingh during a HennepinCounty Sheriff's sale in Februaryy for $13.5 million. Olnick lost controol of the mortgage after Ceridian left the building andOlniclk couldn't get financing to cover a $34 milliob balloon payment.
The total value of the deal is estimated atabour $50 million, according to sources familiar with the which includes a $15 million renovatioj of the building's exterior curtain wall and upgradecd elevator and security systems. HealthPartners will occupy the buildinbg throughoutthe 18-month renovationm project. McGough said he's never been in such an interesting positiomn witha project. "We didn't have a lot of McGough said. "They didn't have to sell the McGough flew to New he said, where officials in Olnick's offic asked why he was there becausr they hadn't put the buildiny up for sale. Olnick officials did not respond to requestsafor comment.
Russ Nelson, who representer HealthPartners as principalof Minneapolis-based real estatw consulting firm Nelson, Tietz & called it one of the most complexc deals he's ever worked on. "If shows what you can do with a compant that is focused and motivated like he said. The deal apparently doesn't impact pending lawsuits over the propertgy between Fortune Funding andthe building's formetr owner, Ceridian, which built the towerd in the early 1970s when the company was knowh as Control Data Corp., is bein sued by Fortune and Prudentiak for $20 million in U.S. Distric Court.
The suit claims that Ceridiahn failed to maintainthe building, which has windowas that leak during rainstorms. Ceridianm told CityBusiness in the past that the repairs were eithe r not necessary or were notits responsibility. It has filed a countersuif against Fortune, and a trial is scheduled to startythis month. Attorneys representing Ceridian andFortunr couldn't be reached for comment.
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