New owner plans to finish Sexton Lofts

The Sexton Lofts condominium development in downtown Minneapolis has a new owner that plans to complete units left unfinished when the project was hit with financial and legal problems.

Minneapolis Lofts LLC, a business controlled by Twin Cities developer Andy Chase, recently bought the condo building at 521 S. 7th St. from San Francisco-based Bank of the West, which had foreclosed on the property in 2007. The purchase price was about $4.5 million, but Chase said Friday he expects to invest about $2 million more to complete about 12 unfinished condos in the 123-unit building.

The purchase also included a vacant lot next to the 85-year-old Sexton building. Chase said he may develop it, but for now it will be converted to a parking lot for condo residents.

The previous owners, a development partnership called Sexton Lofts LLC, paid $12.4 million for the commercial building and the lot in 2005. They wound up suing each other for a variety of financial misdeeds, including mismanaging a $26 million construction loan. Some of the money was to be used to build a second phase that was to include a parking ramp. Condo owners sued the developers over the lack of a ramp, the cost of which had been included in the purchase price of some units.

Under the previous owners, the Sexton also became the focus of a mortgage-fraud investigation by the U.S. attorney's office. Last week federal authorities disclosed that Brett Thielen, the majority development partner, had pleaded guilty to defrauding lenders in a $2.5 million mortgage-flipping scheme. Federal officials last week also unsealed an indictment that accuses two other men of conspiring with Thielen in the alleged fraud involving 13 condo sales at the Sexton.

Thielen is awaiting sentencing, and the other two men are awaiting trial. One other person already convicted of mail fraud and conspiracy for his role in the Sexton mortgage fraud was sentenced in August to 30 days in prison and three years of supervised release.

Chase said he believes the Sexton has lot going for it despite its past troubles. He said he was attracted to its downtown location and because the building offers units with unique floor plans, hardwood floors, high ceilings, tall windows and interior brick walls. He also said he's become more interested in redevelopment projects because the current market for new development is sluggish.

Chase has been active in the local multi-unit housing market for more than 20 years through several business entities, including some affiliated with his Burnsville-based company, Chase Real Estate. Recent projects include Highland Pointe, a condo project in St. Paul's Highland Park neighborhood built in 2007 which sold out all its 145 units, and two large apartment developments -- the Pointe at River Crossing in St. Paul and Waterford Commons in Rosemount.

Susan Feyder • 612-673-1723