One Chatham Center, the flagship of the Uptown “city within a city” built during Pittsburgh’s first renaissance, is facing foreclosure after defaulting on a $15.2 million mortgage.
Allegheny County Common Pleas Court Judge Christine Ward issued a consent order this week clearing the way for HSBC Bank USA to foreclose on and sell the office tower. Elteq Partners I Limited Partnership, the building’s owner agreed to the order.
HSBC filed a complaint in foreclosure in June, contending that Elteq hadn’t made monthly mortgage payments since February. That triggered a default, which required Elteq to repay the entire balance.
The foreclosure affects only the first floor and floors three through nine of what is known as One Chatham Center. The Marriott City Center hotel occupies the rest of the 20-story building. It is separate from the office portion and is not part of the foreclosure.
However, Shaner Pittsburgh Hotel, the Marriott’s owner, has been granted permission to intervene in the case. In a petition to do so, it said it had entered into various written agreements with Elteq involving maintenance, utilities and facilities related to One Chatham and wanted to protect its interests.
In the foreclosure complaint, HSBC stated that Elteq secured the mortgage, in the amount of $14.8 million, in 2006. With interest, late fees and other charges, the balance is now $15.2 million.
Judge Ward in July appointed the CBRE real estate firm the receiver for the property, responsible for operating, maintaining and managing it.
Christopher P. Schueller, attorney for HSBC, could not be reached for comment. Doug Campbell, attorney for Elteq, declined comment.
The office portion of One Chatham has been struggling in recent years. UPMC has moved about 550 employees from the building to the Heinz 57 Center, Downtown. It also transferred another 1,850 workers out of One Chatham and Two Chatham Center to the U.S. Steel Tower. It no longer has any employees in One Chatham.
With 223,584 square feet of office space, One Chatham is now nearly empty, with an 88 percent vacancy rate, according to the Newmark Grubb Knight Frank real estate firm.
UPMC’s decision to leave the building “certainly was a significant blow. It was a big chunk of space in that building and had a significant impact negatively,” said Paul Horan, founding principal of the Colliers International real estate firm.
One Chatham is part of the 5.5-acre Chatham Center complex across the street from Consol Energy Center. It includes the 17-story Two Chatham Center, a 20-story condominium building, the Marriott and a 2,100-space parking garage.
Chatham Center opened in 1966, with Richard King Mellon, a leader in the city’s first renaissance, flicking the switch that lit the $26 million complex and plaza fountains. It was part of the Lower Hill redevelopment area where 1,300 buildings were demolished in the late 1950s and early 1960s to make way for the Civic Arena.
At the time, the development included One Chatham, featuring eight stories of offices and a Howard Johnson motor lodge; the residential building, then apartments instead of condos; and a six-level parking structure. Another amenity, a 660-seat movie theater, closed in 1985. Two Chatham opened in 1981.
Mr. Horan believes that One Chatham could make a comeback with an ownership with the capital and the commitment needed to upgrade the space, particularly the windows and the heating and cooling system.
He said the building might be appealing to tenants given the limited office space available Downtown.
“I do think that with a committed ownership group that would put capital back into those areas that need help, there would be demand,” he said.
This isn’t the first time One Chatham has been involved in a foreclosure. All of Chatham Center was sold at a sheriff’s sale in 1975 after the owner was unable to meet the mortgage payments.
First Published: September 6, 2014, 4:03 a.m.
