Lender takes ownership of Wichita Executive Centre
07/30/2013 7:19 AM
07/30/2013 7:19 AM
One of Wichita’s largest office buildings is emerging from the limbo into which it fell when Minnesota-based Real Development ran into financial problems.
Salt Lake City-based Security National Life Insurance Co. earlier this month took over ownership and operations of Wichita Executive Centre, 125 N. Market, from Real Development.
Security National vice president Bryce Baker said Monday that the company expects to spend $3 million to $5 million over the next two years to renovate the building. It will upgrade systems and common spaces to eliminate some of the embarrassing issues of the past, such as having the air conditioning quit in the middle of the summer.
The 19-story building, formerly known as the KSB&T building and later the SC Telcom building, is about 300,000 square feet, with about 200,000 square feet of office space and 100,000 square feet in a long-vacant hotel.
Real Development had been trying to land a tenant to reopen the hotel, but that never worked out, Baker said.
Security National is focusing on renovating and filling up the office space, which is just 40 percent occupied, and ignoring the hotel for now.
“They were trying to hit home runs,” Baker said. “We’re content with base hits.”
The money will be used to add new chillers and modernized elevator controls, repair the elevated walkway to Exchange Place, upgrade and redecorate lobbies on some floors, renovate the 19th floor as a reception and event area and install a ground-floor deli and gym.
The company expects to hold on to the building long term and spend more as it rebuilds its tenant base.
Security National, a life insurance company with a variety of investments and real estate, already had a large financial stake in the building. In 2011, it loaned Real Development’s Michael Elzufon and David Lundberg about $5.5 million to help them negotiate a complex real estate deal that also involved getting a federal grant to redevelop Exchange Place. But the deal stalled and they ultimately ran short of money.
Security National had the first mortgage on Wichita Executive Centre, Baker said. As some tenants left over the past two years, the building’s value fell below the loan value. This spring, Elzufon and Lundberg agreed to turn over the keys to the building to Security National and pay a portion of the shortfall.
Security National also had second or third mortgages on other Real Development properties, the Farmers and Bankers, Landmark Square and Orpheum office buildings, and surrendered their interest to facilitate sales, Baker said.
The switch from the struggling Real Development to a large and experienced real estate investor is very good news for downtown, said Jeff Fluhr, president of the Wichita Downtown Development Corp.
“It will really help move downtown forward,” he said.
Baker said he is now familiar with Wichita and excited about a chance to revive Wichita Executive Centre, which he said has a lot of potential.
“We are doubling down on it because we believe in Wichita and the vibrancy of downtown,” he said.