Four decades after its twin smokestacks went idle, the Market Street power plant changed hands again Thursday, when developer Joseph Jaeger Jr. cast the lone bid of $8.72 million for the riverfront property at a foreclosure auction.
The power plant was auctioned Thursday after its owner, Market Street Properties LLC, failed to meet the terms of a reorganization plan that had previously been laid out in bankruptcy court. The company’s mortgage lender foreclosed on the plant, clearing the way for Thursday’s auction.
Market Street Properties owed at least $15 million in principal, interest and fees to Victoria Land & Development LLC, a company controlled by Jaeger, for two mortgage loans, according to court filings.
That made Jaeger the property’s primary creditor. Jaeger’s auction bid essentially goes back to his company as the creditor.
In an interview after Thursday’s auction, Jaeger, the president and CEO of the MCC Group, said it’s likely to be years before plans are finalized on what to do with the 20-acre site near the upriver end of the Ernest N. Morial Convention Center.
The power plant was built in 1901 and shut down in 1973.
Jaeger is also among a team of developers vying to develop a large swath of vacant land downriver from the power plant. That 47-acre tract is owned by the Convention Center and stretches from Henderson Street to Market Street.
The center’s governing board is in discussions with a team that includes Jaeger as well as developer Darryl Berger and the Howard Hughes Corp. to serve as the master private developers for that project.
Hughes, an experienced national retail developer, owns the nearby Outlet Collection at the Riverwalk. Jaeger and Berger are both successful local hotel developers.
The development group has proposed, among other things, building a large hotel, residences, a performance venue, a conference center, various dining areas and a “cultural campus” for research on the 47-acre tract.
Jaeger said Thursday that he had “a couple offers on the table” to buy the nearby Market Street property but that he plans to hold onto the site for now because of its proximity to the larger development site. Together, the sites could cost upward of $2 billion to develop.
Market Street Properties purchased the power plant from Entergy in 2006 for $10 million. The group said it planned to use Gulf Opportunity Zone bond financing to redevelop the site with a hotel, condominiums, retail stores and entertainment.
Those plans fell apart in 2009 when the company filed for Chapter 11 bankruptcy protection after one of its mortgage creditors tried to collect on a late note. That creditor eventually transferred his stake in the property to Jaeger’s Victoria Land.
At the time, Market Street Properties said it had just $4 million in cash and owed $26.8 million to nearly 40 creditors. Its only other asset, the power plant, was valued in court filings at $48 million.
Follow Richard Thompson on Twitter, @rthompsonMSY.