Former downtown cigarette factory sells for $7.5 million

Dec. 31, 2013 @ 06:34 PM

A former Liggett Group cigarette factory on Main Street downtown sold on Monday to a Maryland-based real estate company that specializes in building out research space for prominent academic institutions.

The vacant, seven-story former factory at 701 W. Main St., known as the Chesterfield Building, sold for $7.5 million to Wexford Science & Technology. Wexford is part of the real estate investment trust BioMed Realty and specializes in developing facilities for institutions, especially universities, university-led research parks, and health care systems.

In a news release announcing the sale, the company cited the building’s proximity to four major universities -- Duke University, the University of North Carolina at Chapel Hill, N.C. State University and N.C. Central University --  as a factor in the company’s interest in the property.

“As a developer of research-based communities for prominent research universities and their health systems around the country, we consider the Durham market, and the Chesterfield Building, an ideal location to continue Wexford Science & Technology’s expansion,” Daniel C. Cramer, senior vice president of development for Wexford Science & Technology, said in the release.

The company is in the early stages of planning what it will do with the Chesterfield Building, said Rick Howe, senior director of corporate communications for BioMed Realty, but, he said it will be geared toward life science and technology. He said the choice of tenants will dictate how it’s redeveloped.

“The Wexford model is to build space for academic and other institutions who want to associate and affiliate with academic institutions,” Howe said. “There’s a hardly a better place that we can think of other than the Triangle area.”

The sale appears to bring to a close a confusing chapter in the building’s history that included multiple legal snarls and multiple potential buyers.

At one time, the building’s redevelopment was planned as part of the West Village project, a mixed-use development apartments, shops and restaurants composed of former Liggett & Myers Tobacco Co. buildings. That redevelopment was undertaken by an original team that included former Duke University basketball stars Christian Laettner and Brian Davis.

Although the developers envisioned adding the building to West Village, they lost the building when they defaulted on a $10 million loan secured by the first mortgage for the factory.

The building ended up in the hands of the company that originally had serviced the loan, Select Capital Management. But due to a U.S. Securities and Exchange Commission investigation involving Select Capital, the building ended up in the hands of a shell corporation s owned and controlled by two of the major investors in the original $10 million loan: the Minnesota company Taylor Funding and a related company, Northland Securities.

Another lawsuit brought by two other investors in the loan appeared to have blocked the sale to Wexford earlier this year. That lawsuit was brought by former NFL quarterback JaMarcus Russell and New York Jets linebacker Calvin Page, who together had contributed $3 million to the $10 million loan in 2008. In addition to disputing that transfer of the building to the shell corporation, Russell's and Pace's lawsuit also argued that the corporation tried to sell the building without their knowledge and with a plan to keep all the proceeds.

However, in a court filing dated Monday, the lawsuit was voluntarily dismissed. Howe said the buyer was not a party to that lawsuit, and could not comment on it, other than it got cleared and the sale was able to move forward.

Howe said Josh Parker, a Durham resident who was at one time vying to buy and redevelop the building through his own firm, now works for Wexford, and will be one of the senior managers on the project.

Geoff Durham, president and CEO of the downtown-focused economic development group Downtown Durham Inc., said DDI is “very excited” to help work with the Wexford team on the redevelopment for the building.

“This project will be a great addition to west end and will continue to build on the downtown's reputation as a center for innovation,” Durham said in an email.