In The News

By Bridgett Weaver  – Reporter, Louisville Business First
Dec 2, 2016, 4:39pm EST Updated Dec 2, 2016, 4:55pm EST

The Kentucky Court of Appeals ordered Porter Bancorp Inc. (NASDAQ: PBIB) the Louisville-based parent company of PBI Bank, to pay more than $10 million to Signature Point Condominiums LLC, Signature Point Apartments LLC and Signature Point KTC.

The court on Friday found PBI responsible for six different claims made by the prosecution, including fraud and the breach of the duty of good faith.

Louisville-based Zielke Law Firm, which represented the condo groups, sent a news release out explaining the situation that led to the dispute.

The claims stemmed from a 2006 transaction in which Scott Hagan, a real estate developer bought 90 acres of properties in eastern Jefferson County to create condos and other upscale residential developments. According to the court of appeals written decision, U.S Bank originally provided the financing for the purchase, but PBI took over the financing in 2007 at Hagan’s request. PBI provided a $25 million loan to Signature Point, split evenly between a $12.5 million revolving construction loan and a $12.5 million revolving development loan. A revolving loan allows for the loan amount to be withdrawn, repaid and redrawn again in any manner and as many times as needed until the the arrangement expires.

In 2010, with the real estate bubble burst and the real estate market in shambles, PBI and Signature Point negotiated a deal that allowed PBI Bank to hold the deeds to the property while letting Signature Point out of the loan agreement. PBI took the property in lieu of foreclosure, agreeing only to provide Signature Point with a right of first refusal before it sold the property to be developed.

To get Hagan to agree, the Zielke release said, the bank assured him that no one was interested in the property, a statement found to be fraudulent by the jury. The appellate court’s decision explains that only five days before making the agreement, there was a letter of intent from another company to buy at least one of the properties.

Signature Point was awarded $1.5 million in compensatory damages plus $5.5 million in punitive damages for a total of more than $7 million after the 2013 trial.

The appellate court also allowed to stand a 12 percent interest rate enacted in the trial court, despite several attempts by PBI to have the percentage lowered. Including the interest, which accumulated at a rate of $3,248.70 per day since the trial ruling in 2013, the complete amount PBI Bank must pay is $10,099,134, the Zielke release said.

The decision comes after a particularly volatile time in PBI’s history. The company has undergone changes in leadership and management due to problems, like this lawsuit, that stemmed from mismanagement during the Great Recession.The bank has been struggling to come out from under the dark cloud left behind by former management since it was replaced.

“This is part of all that bad business legacy that we’re trying to overcome from the recession years,” Kerry DeMuth, director of marketing and communications said in a Friday afternoon interview. “This was totally previous management.”

DeMuth said this lawsuit is part of a continued effort to clean up those past mistakes.

“None of those players are part of the team anymore,” she said. “The bank representation that initiated those business deals is no longer part of the bank.”

PBI Bank borrowed $35 million from the Troubled Asset Relief Program in 2008 under the Capital Purchase Program in an effort to breathe new life into the bank and repaid the loan in 2014. The company continues to operate under a consent order it agreed to with the Federal Deposit Insurance Corp. and the Kentucky Department of Financial Institution.

“We are very disappointed with the court’s decision regarding this legacy issue,” John Taylor, the bank’s president and CEO, said in a news release. “However, the bank’s capital and liquidity remain strong and its mission to serve our customers remains unchanged. At this juncture, we are conferring with out legal advisers and evaluating the merits of further pursuing the appellate process.”

DeMuth said it is still being decided how the bank will move forward with further appeals. She said officials plan to take some time to consider the remaining legal options that are available. No matter how they proceed, the bank is confident in its current position.

“Even if we have to pay the full amount, it’s not going to kill us,” DeMuth said. “We planned for the worst-case scenario.”

By Sheldon S. Shafer  – Courier-Journal
Nov 1, 2016, 6:40pm EDT

Amish Hills Furniture, facing displacement from its current location in a strip mall along Breckenridge Lane, has signed a long-term lease for about 10,000 square feet of space in a new home, in Shelbyville Road Plaza.

Tommy Edwards, a retail leasing specialist with Hagan Properties, which owns the busy Shelbyville Road Plaza just west of Mall St. Matthews, said the furniture business expects to open at its new location by year’s end.  Its space is adjacent to the U.S. post office site, Edwards said.

The Norton Healthcare organization plans to develop a large medical office building where the furniture store is located, along Breckenridge Lane where a strip mall will be demolished.  That area in St. Matthews is in the thick of a rapidly developing medical sector where several Norton competitors have existing or planned major medical facilities.

According to plans filed with city regulators, Norton Properties Inc. plans a three-story building with 83,000 square feet of space surrounded by nearly 500 parking spaces at the site near Breckenridge and Dutchmans Parkway.  The shopping center tenants include a Visionworks, an Office Depot, a restaurant, and a Pep Boys.

No firm schedule has been announced for developing the medical offices.

Amish Hills Furniture will bring another anchor-style tenant to Shelbyville Road Plaza.  Other major tenants include Trader Joe’s, Nordstrom Rack, and Quest Outdoors, along with dozens of smaller retailers and restaurants.

Shelbyville Road Plaza has about 390,000 square feet of space.  The center tends to stay at or near full occupancy.

By Marty Finley– Reporter, Louisville Business First
Sep 16, 2016, 3:18pm EDT Updated Sep 16, 2016, 3:43pm EDT

Louisville-based Hagan Properties Inc. has signed a long-term lease with the U.S. Postal Service after word came in May that the USPS planned to vacate Shelbyville Road Plaza by the end of the year.

Tommy Edwards, a retail leasing representative with Hagan Properties, declined to disclose the lease terms when reached by phone Friday, but he said the new deal will keep USPS at the center for several more years. The post office has had a presence at Shelbyville Road Plaza since the early 1970s. It operates a retail outlet and distribution services there.

Edwards said in a news release that the deal came together because the city of St. Matthews and local residents “voiced their desire that the USPS remain at Shelbyville Road Plaza.”

Edwards said the post office occupies more than 22,000 square feet of space at the nearly 400,000-square-foot shopping center, which is almost fully leased.

Negotiations appeared to break down between the two sides earlier this year, creating concern about USPS’ future commitment to the center. Talk had recently turned to USPS looking for alternate locations.

Edwards told us in May that he received a call from USPS representatives that the Postal Service would vacate its longtime home by Dec. 31. Edwards said the call came as the two sides were negotiating details of a long-term lease extension that just needed a signature.

And Susan Wright, a representative with the USPS corporate communications office, said at the time that USPS had not made a final decision to leave the center and was still interested in negotiating the lease.

USPS confirmed the lease agreement when reached Friday.
“We look forward to serving our many loyal customers at the St. Matthews Station on Shelbyville Road,” said Louisville Postmaster Joe Meimann in a statement.

Edwards said Hagan held out hope that USPS would stay in the space, but the company moved ahead in contacting potential retailers, restaurants and furniture stores that have expressed interest in the location in the past.

In other recent activity at the shopping center. Quest Outdoors recently opened an expanded store in the shopping center, taking the former Borders space.

Also, Carter’s Inc., the parent company of Carter’s, Osh Kosh B’Gosh and other baby and children’s apparel brands, opened a store at the shopping center this summer.

Edwards said Cyclebar, a premium indoor cycling franchise, is the latest tenant planned for the shopping center, taking about 3,000 square feet. He said it should be open by the end of the year.

By Marty Finley  – Reporter, Louisville Business First
Sep 15, 2016, 10:47am

A tenant has claimed a 13,000-square-foot retail building recently completed by Hagan Properties Inc. at Middletown Station, a large mixed-use commercial development on nearly 70 acres in eastern Jefferson County.

Tommy Edwards, a retail leasing representative with Louisville-based Hagan Properties, said Louisville-based Norton Healthcare Inc. is taking the entire building, which was constructed on more than an acre at 12955 Shelbyville Road. He did not disclose the lease terms.

The new space is along English Station Road, next to a building that houses a Feeder’s Supply Store. Construction costs previously were estimated at around $800,000.

Edwards said he thought Norton would move in early next year. But Norton public relations project manager Lynne Choate said it’s very early in the planning process and there’s no firm timeline.

Norton plans to relocate Kosair Children’s Hospital Medical Associates – Middletown from a smaller space it currently leases across the street.

“We want the additional space,” she said. Two doctors work in that pediatric practice, and both will move.

Middletown Station is anchored by a Wal-Mart Supercenter and Target store off Shelbyville Road near the Gene Snyder Freeway. Together, Target and Wal-Mart account for about 360,000 square feet of the shopping center, which has more than 600,000 square feet.

Middletown Station has multiple buildings that house a mix of restaurants, retailers and medical users.

And the development still has room for growth. Hagan Properties has the capacity, Edwards said, to add another 130,000 square feet of space to the development near Target if needed.

Edwards said he expects that Middletown Station, once completed, will have about 750,000 square feet of leasable space. Hagan has not indicated a timeline for additional construction there.

“We will construct it as the market demands,” Edwards told me late last year.

By Sheldon S. Shafer  – Courier-Journal
Sep 9, 2016, 2:39pm EDT Updated Sep 9, 2016 2:48pm

CycleBar, a business committed to improving physical fitness and featuring stationary bicycles, has signed a lease to open a store at Shelbyville Road Plaza.

The business is leasing 3,000 square feet of space in the retail center. CycleBar will probably be open in December next to Qdoba and near Trader Joe’s and Genesis Diamonds, said Tommy Edwards, retail leasing manager for Hagan Properties, which owns the shopping center on Shelbyville Road in St. Matthews.

CycleBar was founded in 2004 and now has about 75 locations. Promotions call CycleBar a luxury boutique fitness business. The typical outlet offers classes with trained instructors in a “cycle theater” with about 50 bikes and LED lighting, wide-screen graphics and music.

Studio amenities typically include free towels, showers, lockers and shoes. Membership is not required.