O’Neill Properties Group

Is the Role of Scrooge Being Played by Citizens Bank?

This is a follow-up to my posting a couple of days ago re Citizens Banks $61 million judgment against Brian O’Neill and O’Neill Properties Group’s Uptown Worthington project.

The $540 million Uptown Worthington mixed-town center plan calls for 752,500 square feet of lifestyle retail space, 227,960 square feet of office space, 753 residential units and 160,000 square feet of hotel space. The site location of Uptown Worthington is on Route 29, between Route 202 and Route 30 in Malvern. Although there does not appear to be much other construction underway on the 100 acre site, the Wegmans grocery store is nearly complete and  appears on track to open by summer 2010 (delayed from the earlier stated fall 2009 date).

Like so many other commercial real estate developments, the Uptown Worthington project has been faced with the challenges of our country’s severe economic times. O’Neill Properties Group’s remaining loan balance of $61 million matured this past June. Even after the loan was 90-days past due, Citizens Bank attempted to renegotiate the loan agreement in late September, probably trying to ward off any legal court wranglings. Attorneys for O’Neill Properties Group offered Citizens Bank various terms for the loan agreement but all were deemed unacceptable by the bank. Some of the proposals involved O’Neill using Pennvest loans from the Pennsylvania Infrastructure Investment Authority to pay for certain loan expenses. Pennvest loans are made for infrastructure improvements and to spur local economic development. Apparently, Citizens Bank wanted to take the expected Pennvest loan money to pay O’Neill’s outstanding loan principal. However, when O’Neill and Citizens could not come to an agreement over the Pennvest loan money, Citizens threatened legal action and as we have now learned, filed a $61 Million judgment against O’Neill a few weeks ago.

Although Mr. O’Neill has not filed a petition to strike the recent Citizen Bank judgment, he did make the following statement to Philadelphia Business Journal,

 “Citizens commenced suit. We are not in default. Citizens is in default. They are having their own internal problems which caused this and their inability to live up to their contractual commitments. We are hopeful that they will acknowledge the error of their position and reverse course. Alternatively, we will go to war.”

Sounds like ‘fighting words’ from Brian O’Neill.  This situation is setting the stage for a real power struggle between these two corporate giants, O’Neill Properties Group vs. Citizens Bank.  It’s hard to know who’s right . . . is Brian O’Neill and his company the wronged party?  Or is Citizens Bank being unreasonable and the ‘Scrooge’ in this scenario?  I certainly can not offer an opinion, except to say this situation probably has many lawyers on both sides seeing green this holiday season!  One thing for sure though is that the community certainly doesn’t want to see this project hang in limbo in its current incomplete state.  In the spirit of the season, here’s hoping that both sides will quickly reach an amicable solution.

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Not a Very Merry Christmas for Local Developer

Along with me, I am sure all of you have been watching the development of the Uptown Worthington project on Route 29.  This redevelopment project taken on by Brian O’Neill and O’Neill Properties Group on 100 acres of the former Worthington Steel factory was supposed to be a model for the planning concept ‘New Urbanism’.  The project had a price tag of $540 million, 1.6 million sq. ft and was supposed to include 753 luxury residences, nearly 800,000 sq. ft. of upscale retail and about 185,000 sq. ft. of office space.  Having Wegmans Market in our backyard was exciting news for a lot of us! 

Now it looks like Uptown Worthington may be a model for great projects falling to the woes of today’s economic crisis.  O’Neill Properties Group is in danger of having to give the keys back to Citizens Bank.  Citizens Bank has secured a $61 million judgment against the developer who borrowed money to build the project.  Court documents filed a couple of weeks ago show that the bank entered the judgment against Brian O’Neill, after the bank and the King of Prussia developer were unable to come to terms on the loan.  In researching the situation, I determined that O’Neill Properties originally arranged an $86 million loan with Citizens Bank through Malvern Hill Associates and other O’Neill-affiliations for the land acquisition and construction costs.  O’Neill guaranteed the loan, which was initially made in 2006 and amended in October 2008 when the financial markets worldwide were in turmoil. As of this date, Mr. O’Neill has not filed a petition to strike the judgment (the legal option when someone places a judgment against them.)  

The million dollar question (or rather $61 million question) – what does this news mean for the project? I am not sure what the timeline is for O’Neill Properties to resolve the loan issue . . . and what happens in the meantime, does the project continue with O’Neill Properties?  I’d like some of our developer, planners, and contractors to weigh in on this one.  Does my much anticipated Wegmans Market get completed?  Will Citizens Bank become the developer in this project?   

This turn of events for Brian O’Neill certainly must be causing pause for Peter Monaghan and Strategic Realty Investments (SRI).  Here we have SRI, the recently-named master developer of the Paoli Transit Center project which is to include multi-use development, just down the road from the current financial woes of the Uptown Worthington project.  I don’t personally know Brian O’Neill, but in the interest of the community, here’s hoping that some good news comes his way (in the form of $61 million!).  For Peter Monaghan, O’Neill Properties Group’s misfortune must be an eye-opening revelation, so here’s sending best wishes to Strategic Realty Investments for their success with the Paoli project!

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