Posted on Thursday, October 21, 2010
Anthony Pugliese III, who has proposed building the 41,300-acre Destiny in Central Florida, said hes shocked that a bank filed to foreclose on a storage facility he built in Coconut Creek.
Branch Banking & Trust Co. filed a lawsuit Oct. 4 against Coconut Creek Johnson Road. Pugliese is not named in the complaint, but he signed the $14.2 million mortgage in 2008 as managing member of the developer, which shares a Delray Beach address with the Pugliese Co.
Orlando attorney W. Glenn Jensen, who represents BB&T in the lawsuit, could not immediately be reached for comment. The mortgage was originally made by Colonial Bank, which failed in 2009. BB&T acquired its assets.
The developer completed the 71,880-square-foot Automated Self Storage Systems building, at 5431 Johnson Road, last year. It uses computers and robotics to help people store their belongings.
Pugliese said BB&T called the loan into default because Coconut Creek Johnson Road owes $44,000 in 2009 property taxes. He said he does not understand why the bank doesnt let him use the $1.8 million interest reserve or the $600,000 in tenant improvement reserves to fund those taxes.
Pugliese said he told the bank he wanted to negotiate, but he was hit with foreclosure before hearing back.
The bank jumped on this so quickly that we wonder what is going on, Pugliese said.
He said BB&T doesnt care about working out a deal because the loan is covered by the banks loss-sharing deal with the Federal Deposit Insurance Corp., which would absorb most of the losses on the project.
The big banks are allowed to wreak havoc on real estate developers like myself, Pugliese said. They take over banks for pennies on the dollar and, at the first opportunity they have to put a property in default, they do it. They can sell loans at a loss to get it off their books and, on top of that, they get the FDIC, which is the people, to pay for that loss.
Many developers have complained about the banks loss-sharing agreements, and some banking experts have said the deals could harm the economy.
Destiny is a joint venture between Pugliese and Fred DeLuca, who founded Subway. State growth management regulators have been holding up their plans for a new city in Osceola County.
Pugliese said Destiny is on hold for now.DBR