You are viewing this article in the archives. For the latest breaking news and updates in Ann Arbor and the surrounding area, see
Posted on Fri, Aug 5, 2011 : 11:17 a.m.

Landlord in default on Borders properties, including Ann Arbor headquarters

By Nathan Bomey


Agree Realty owns Borders' headquarters building.

Melanie Maxwell |

(Editor's note: This story has been corrected to reflect that Agree Realty is in default on six of its seven remaining Borders properties, but it appears the company's stake in the Borders store in downtown Ann Arbor is not affected.)

The landlord that owns Borders' headquarters building and maintains a controlling interest in the retailer's flagship store in downtown Ann Arbor has defaulted on the loan for the headquarters building and could lose the facility.

Farmington Hills-based Agree Realty Co. acknowledged in a quarterly filing with the U.S. Securities and Exchange Commission that it had defaulted on a loan for the headquarters building, which has 330,322 square feet of gross leasing area.

The company said it's in default on six of its seven remaining Borders properties, but it appears that it does not have loans tied to Borders' 40,000-square-foot flagship store in downtown Ann Arbor.

Agree may lose the headquarters building — which would revert to ownership by the lender.

For the loan on the Borders headquarters building, Agree owed $5.6 million in principal as of June 30, according to the SEC filing. Agree was collecting $769,000 in annualized rent at the building, which housed about 400 Borders employees at the time the company announced its plans to liquidate July 18.

Borders' demise caused Agree to slip into default on the headquarters loan, officials said in the filing.

The company's lender "notified us that we are in default and that our obligations under the loan have been accelerated and that default interest is owing," according to the filing.

"As a result of the Borders liquidation program, we would not expect to have sufficient cash flow from the property to continue to pay any of the monthly debt service on the loan and may elect not to pay the debt service," the company said.

An Agree spokesman could not be reached for comment this morning.

Agree had listed the headquarters property for sale in the fall for more than $18 million but reduced the asking price to $10 million in the spring.

Agree said it was in default on six of its remaining Borders properties.

"We are in active discussions with the lenders for all six non-recourse loans regarding an appropriate course of action," the company said. "We can provide no assurance that our negotiations with the lenders will result in favorable outcomes to us. Failure to restructure these mortgage obligations could result in foreclosure actions and the loss of the mortgaged properties. "

The company also revealed in the SEC filing that it had negotiated reduced rent with Borders sometime after the company's Chapter 11 bankruptcy filing in February in an effort to help keep the downtown store in business.

But Borders, founded 40 years ago in Ann Arbor, announced July 18 that it would liquidate. That decision means that 10,700 employees will lose their jobs and the 399 remaining stores are being liquidated, a process that will be completed by September.

Agree's revelations come as liquidator Gordon Brothers Group LLC's DJM Realty unit is actively marketing Borders' store leases for sale in auctions expected to occur within weeks.

DJM listed an asking price of $20.55 per square foot for the 39,876-square-foot downtown store lease.

The retail building has multiple ownership entities, including a family trust and Agree Realty, which has controlled the property after a complex series of real estate transactions.

The property is also separately listed with Michael Lippitt and Bruce Simon of Landmark Commercial Services in Metro Detroit.

Contact's Nathan Bomey at (734) 623-2587 or You can also follow him on Twitter or subscribe to's newsletters.



Fri, Aug 5, 2011 : 10:40 p.m.

I second the comment above on the liquidation sale. I went there and found that most books still cost more than at Amazon. Even in their death throes, they still haven't learned.


Sat, Aug 6, 2011 : 11:32 a.m.

Liquidators don't "learn". They maximize profit during the agreed upon selling period and they closely monitor and tweak things as they go. Borders has no involvement.

Jojo B

Fri, Aug 5, 2011 : 7:10 p.m.

Well the sad row of dominoes continues to fall. But wasn't there an article a few months back about A2 needing more office space for new business? It would be nice if this could turn into an opportunity for somebody new. P.S. Farewell, Borders. I didn't buy anything at your going away party because your liquidator raised prices before the supposed "everything must go" sale. Hope you enjoy shredding those unsold books instead of donating them.