Heer's, Jamestown hit auction block

A pair of properties home to little more than unfulfilled dreams in recent years have been put on the auction block.

The long-vacant Heer’s building on Springfield’s Park Central Square sold April 22 on the southern steps of the Greene County Courthouse, and Jamestown, a mixed-use development consisting of 140 residential and commercial lots in Rogersville, was marketed in an online auction that ran April 22–25.

Changing hands
The long-vacant Springfield landmark Heer’s building sold at a foreclosure auction for $960,000 to real estate investment group E and J HIDC LLC.

Buyer representative Chris Barhorst, an attorney with Kansas City law firm Swanson Midgley LLC, submitted the lone bid among a crowd of roughly 50.

E and J HIDC already had purchased the loan on the building in February for an undisclosed amount, Barhorst said, with the expectation it would foreclose on the property owned by Illinois-based Chouteau Properties Inc. Allison Tanner of Swanson Midgley represented note holder E and J HIDC on the credit-bid sale. Chouteau Properties had owned the building that St. Louis developer Kevin McGowan attempted to turn into a mixed-use property with loft apartments.

Walt Nelson, associate professor of finance and general business at Missouri State University, attended the auction with seven students from his real-estate development class.

“Most of the time, if a property goes into foreclosure, the lender just takes it back,” Nelson said, noting he wanted his students to experience a public auction. “That’s an important step because now they’re in the driver’s seat with the title.”

Barhorst said the Kansas City investors that comprise E and J have no firm plans for the building.

“It’s just a business transaction,” Barhorst said. “They work with foreclosures, and if they can make money off of foreclosures, they’re happy to do it.”

He said E and J, which was formed in February, according to Missouri secretary of state records, was established to purchase notes and foreclose on defaulted loans. Barhorst said the partners would likely try to sell the property, though they could connect with developers to work up plans for future uses.

After failing to obtain financing, McGowan scuttled his $29.3 million redevelopment plans for the Heer’s building in late 2010. McGowan bought the property from the city for $3 million in 2007 and later sold it to Chouteau Properties with an agreement that he would buy it back after completion of the project, according to Springfield Business Journal archives.

City of Springfield spokeswoman Cora Scott said a $130,000 lien the city issued on the property transfers to the new owners.

McGowan followed developers Vaughn Prost and Warren Davis, who had each planned to redevelop the eight-story, 150,000-square-foot building after the Heer’s department store closed in 1995.

Nelson said a lack of a buyer other than the note holder at the auction is not a sign that Heer’s isn’t marketable.

“Just because people didn’t show up to buy it, doesn’t mean (E and J HIDC) won’t sell it. It is just a legal process that has to be taken care of,” Nelson said.

Shopping Jamestown
Developer Stephen Cope, president of Jamestown LLC, said he’s been marketing the 200-acre property for years, and he thought the online auction, which ended 1:30 p.m. April 25, would help promote the mostly vacant land he’s invested roughly $4 million in.

Cope has come under scrutiny lately because Jamestown LLC, the formal owner of the expansive development, has not paid the $969,564 tax bill it owes Greene County. A neighborhood improvement district was established by Cope and the county to cover infrastructure development, which was scheduled to be repaid with increases in property tax revenue as the development filled up. However, only seven of the property’s 51 commercial lots have been purchased and only five of the 104 residential lots have found a new owner. Cope said he’s been working with county officials in recent months to avoid a foreclosure sale of the property, which could occur in August, according to County Administrator Tim Smith.

Cope said the online auction carried little risk. Before the auction concluded, he said if it garners a large enough bid to hit the undisclosed reserve price he had set, then the property would be sold, and end a 12-year chapter in his life. If bids didn’t reach his threshold for a sale, then at least the property would have reached a national audience through the Auction.com website, he said.

“I’m just trying to get exposure for the property, because (the auction) goes out to more than 5,000 commercial brokers across the U.S. Even if I don’t sell it – I don’t know if I’ll get the price that I want – it was still a great marketing tool,” Cope said on April 24, declining to disclose his reserve price.

The top bid as of noon on April 25 was $1.2 million, according to Auction.com, but by the time bidding closed, the final bid was $3.35 million. After the auction ended, Cope declined to say whether the bid hit his reserve price to trigger a sale, citing a confidentiality agreement. He said previously his reserve price was well above $1.25 million. Brock Harris, a representative of Auction.com, declined to be interviewed about the auction.

On April 24, Cope said he received up to 20 calls during the week prior to the auction from interested parties from Canada, India and California. If Cope didn’t agree to an auction sale, he said two potential buyers he declined to name were in line to cover the tax debt.

A lack of interest in the Jamestown development, which includes a 27,340-square-foot shopping center fronting U.S. Highway 60, led to a May 2010 bankruptcy filing one day before a scheduled foreclosure sale. Court records show the bankruptcy was dismissed in September 2010. Cope said in June 2011 he had received financing to pay off his debts on the property from an undisclosed lender. In March, Cope said he was not giving up on the development, and was still seeking a big-box anchor tenant.