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

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But now, because the U.S. General Services Administration has refusexd to pay the developerfor “eveh one penny” of the more than $35 milliom the company has invested in erectintg a new federal building in College Park, Opus East is teetering on the verge of the company says. And the problemxs aren’t limited to College Opus’ liquidity problems have had an unexpected impactt on projects at Catholic Universit in the District and as far away as How serious arethe long-term ramificationx for Opus East? “It’s not something we’re happuy about — we’ll put it that way,” said a corporates spokeswoman.
Opus East’s parent company, Minn.-based Opus Corp., has retainesd legal counsel “to explore bankruptch or restructuring” for Opus East and Opus a Phoenix-based operating company, said the spokeswoman, Winstohn Hewett. Two other Opus operatinbg companies, Opus South and Hill Countrty Galleria, were put into Chapter 11 bankruptcy proceedingsthis spring. For Opus Corp, “this is all reallh new territory,” Hewett said. “In our 56 years in the industry, this is the firsrt time we’ve ever run into a completre meltdown ofthe industry. We’ve never experience anything like this.
” From the company’s perspective, the problems in its East Coast division are attributable in larg part toOpus East’s 2005 GSA contract to design, financ e and build a 269,000-square-foot home for the Nationa Oceanic and Atmospheric Administration’s Center for Weather and Climatw Prediction in College Park. The project broke grounds in 2007 but, despite tacking on additional the GSA has made no payments for any Opus East workso far. The Department of Justice is defending the GSA inOpus East’s As a matter of policy, the department does not commentt when litigation is pending.
In correspondence betwee n thetwo parties, filed in court, the GSA said it has no obligatioh to provide progress payments or to modifyy the lease agreement. Still, the GSA said in the letterss that it had proposed three differentylease modifications, and all three were rejected by Opus By the third quarter of 2007, the projecft was hurting Opus East’s overalpl operations, the company said. Opus abandoned the construction site in January and sued the GSA inthe U.S. Courtg of Federal Claims in May. In the meantimee — with virtually no money available in the capitalmarketds — the company is stretched thin at severap other projects in the area.
As Opus East put the finishingy touches on 100M St. SE, its contracteds buyer, Detroit-based MayfieldGentry Realty Advisors LLC, walked away from the deal in May. Just four blockds away, its 442,000-square-foot speculative office project at 1015Half St. SE is continuingg in full swing. Even so, it’s no cake “In light of the current market until a project is leased and every spec project has the capacit y to financially impactan organization,” Hewetty said.
The company delivered Opus Hall, a 402-bedr dormitory at The Catholic Universithyof America, in January but, by unpaid contractors were filing liens against both Opus East and the At the end of May, at leasr one contractor, Joseph J. Magnolia Inc., had filedr suit for nonpayment agains t Opus East and ContinentalCasualty Co., which had issued a $30 million payment bond on the Catholic project. Although Opus Hall is ownede entirelyby Catholic, the Opus spokeswoman said the contractores should not have filed lienes against the university, only against Opus East and the In Manassas, Opus has spent the past four years planning and building Hastings Marketplace, a 13.
2-acres residential and retail project that woulcd bring the city’s first Harris Teeter grocerh store to the juncture of Prince William Parkwag and Lake Jackson Drive. But both the residentiapl and retail markets had slowed byearlh 2008, and as the economic crisis hit its full stride in the thircd quarter, the company cut the scopde of the project in half. On the things look good at Hastings: One of the two planned buildinges hasbeen delivered, and Harris Teeter is schedulefd to open any day now. But the construction lenderr cut off funding earliee this year after it determineethe property’s value had dropped far below its acceptablde loan-to-value ratio.
Unpaid contractors have filec at least four liens against theManassas property. As a Opus is particularly vulnerable to the seismic shifgt in the commercial realestat market.