Baltimore’s Office-to-Residential Conversions at Risk of Foreclosure

Key Takeaways

PMC Property Group has defaulted on a $16.4 million loan for renovations at 301 N. Charles St., Baltimore.
The 11-story building, previously home to the Baltimore Life Insurance Co., was acquired by PMC in 2012 for $3.4 million.
Other firms in Baltimore are facing similar issues, including Chasen Cos. with multiple property defaults and bankruptcies.

Loan Default at PMC Property Group

A limited liability company under PMC Property Group, based in Philadelphia, has defaulted on a $16.4 million loan intended for renovations at 301 N. Charles St. The building, an 11-story structure that once housed the Baltimore Life Insurance Co., was purchased by PMC in 2012 for $3.4 million. The firm took out the significant loan in 2014 to convert the building, resulting in 92 residential units.

The loan, which is still held by Fannie Mae, matured in late 2022, and the property went into foreclosure in December of the same year. As of March, PMC was left with a remaining balance of $13 million on the principal amount.

Other Developers Struggle with Similar Issues

PMC is not alone in facing challenges with office-to-residential conversions in downtown Baltimore. In March, CC 1400 Aliceanna Street LLC, part of Chasen Companies, filed for Chapter 11 bankruptcy reorganization in Maryland. Chasen had been working on transforming a Fells Point building into a complex featuring around 100 apartments along with retail space, branded as The Anne on Aliceanna. Although it was set for auction, the event was canceled, indicating further financial troubles for the project.

Chasen Cos. is under pressure from First National Bank of Pennsylvania, which has initiated foreclosure proceedings on the property due to a default on a $28 million loan. The firm’s bankruptcy listing includes 49 creditors, with assets and liabilities estimated between $10 million and $50 million. Additionally, another Chasen project, the One Calvert Plaza office building conversion into apartments, has also defaulted on a $34 million loan.

PMC’s Background in Property Conversions

The PMC Property Group operates 13 buildings in Baltimore and has experience converting office spaces to residential units outside of Maryland as well. A notable project includes the historic Wachovia Building in downtown Winston-Salem, NC, which PMC transformed into the Eight West Third apartments in 2021. Further back, the firm successfully converted the R.J. Reynolds Tobacco Co. headquarters and the Allegheny Building in Pittsburgh into multifamily residential spaces.

With various firms navigating similar financial challenges in Baltimore’s real estate market, spectators are watching closely to see how these defaults may influence the city’s ongoing shift from office spaces to residential property usage.

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