Minneapolis Non-Profit Solicits, Obtains Sale-Leaseback Offer On Building To Bail Itself Out Of Possible Foreclosure; City Debt To Be Paid In Full

In Minneapolis, Minnesota, Finance and Commerce reports:

• St. Paul-based Wellington Management Inc. has a deal to buy the Minneapolis home of the nonprofit Green Institute, an environmental consultant/salvage center that has struggled to stay current on loans from the city and its bank. With the sale of the building, “We’ll be completely out of debt, which will be nice,” said Jamie Heipel, executive director of the Green Institute.

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• The Green Institute was behind on payments to the city on two loans: a construction loan and a delinquency loan, related to the nonprofit’s ongoing efforts to keep up with payments. As the city of Minneapolis grew frustrated with the nonprofit’s financial struggles, it weighed options including foreclosure on the property.

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• Heipel said that the Green Institute will remain a tenant in the building, leasing about 2,200 square feet of office space and about 6,500 square feet for its ReUse Center, a retail operation that sells salvaged building supplies.

• The Green Institute retained Kraus-Anderson Realty to broker the property. Heipel said the nonprofit ultimately drew three offers on the building, and added that the Green Institute accepted the offer from Wellington last week.(1)

For more, see Green Institute to sell, lease back headquarters from Wellington (Minneapolis-based environmental nonprofit has struggled to stay current on loans).

(1) The fact that the Green Institute hired a real estate broker to market the property (presumably as a sale-leaseback opportunity for an investor), and the fact that it obtained three (presumably arms-length) offers from which to select are factors that could weigh heavily against it if, a couple of years down the road (especially if the building's value at that time is much higher than the current sale price), it changes its mind and decides it wants the title to its building back, and goes to court to try and have the sale-leaseback arrangement recharcterized as an equitable mortgage. For a case where a court ruled against a property seller attempting to invoke the equitable mortgage doctrine four years after the sale in order to reacquire a property it sold for fair value, and which had increased in value subsequently thereafter, see Hamud v. Hawthorne, 52 Cal. 2d 78; 338 P.2d 387; (Cal. 1959).