State government will be paying rent to U.S. Bank this year after the bank foreclosed on three office buildings on Fair Oaks Lane.
The buildings, 100, 150 and 200 Fair Oaks Lane near Buffalo Trace distillery, house offices for state agencies, including the Department of Revenue, Division of Air Quality, Division of Water and Department of Public Advocacy.
The bank took action against the buildings’ owners – Two-O-Third Aventura based in Miami, Fla., and Sembler Frankfort based in St. Petersburg, Fla. – in 2010 after the companies defaulted on a $31 million loan from 2005 to buy the office buildings.
The two companies bought the Fair Oaks properties for $35.8 million, property records show.
Master Commissioner Charlie Jones, who auctioned the property Monday, said U.S. Bank was the only bidder with $16.9 million. The bank will take ownership at the beginning of the year, he said.
U.S. Bank sought $31 million for the properties plus interest, other liens and attorneys’ fees, according to the notice of commissioner’s sale.
Additional costs and late fees since Oct. 10 have come at a rate of more than $2,500 per day, the notice says, and an affidavit from Wells Fargo Securities Vice President Tina McNeill says the accrued interest hit almost $2.7 million Aug. 11. Wells Fargo was the initial lender.
The properties were recently appraised at $22 million, court records show.
The foreclosure won’t affect the state’s lease on office space in Fair Oaks, said Cindy Lanham, spokeswoman for the Finance and Administration Cabinet.
“The lease will go to the new owner, and we will get a change of ownership notification,” Lanham said in an email. “Change of ownership is not uncommon. The fact that it is a result of a foreclosure is a little unusual.”
The bank has retained Mark Robbins of Lexington-based Robbins Properties as property manager and David Conway as the on-site manager, Jones said.
“Ninety-nine point nine percent of the people there won’t notice a difference,” Jones told The State Journal.