A Chicago real estate developer has closed on the purchase of the Ecolab University Center office tower in downtown St. Paul that had been in foreclosure.
An entity associated with developer John Thomas and Chicago-area real estate investment firm T2 Capital Management bought the 16-story building in a foreclosure auction.
According to an electronic certificate of real estate value available last week, the sale was valued at $5.35 million.
Thomas, chief executive and one of the principals of Chicago-based real estate company Freedom Development Group LLC, said he is bullish on the Twin Cities and sees St. Paul as a "tremendously undervalued" market with low prices and possible high rates of return.
"It's going to blossom in the next few years," Thomas said, of St. Paul.
The Ecolab University Center, located on the corner of Wabasha and 6th streets next to the repositioned Osborn370 building, was in foreclosure when Thomas and his team won an online auction over the summer for the building. Wells Fargo Bank, which acted as trustee for the property, was listed as the seller on the electronic certificate of real estate value. Ecolab had leased the building. The company has moved its workers from several buildings in downtown St. Paul into the nearby former Travelers Cos. tower.
Freedom Development plans to keep much of the building as office space, but Thomas said in the past that he had considered converting part of the building into a hotel or housing.
Thomas said the company plans to close soon on the purchase of the nearby Capital City Plaza parking ramp, which is owned by the St. Paul Port Authority. While the Ecolab University office building does not have parking, potential tenants could use the ramp, which is a few blocks away, he said.
Thomas, who grew up in New York City, said he has been involved in real estate since he was 20 years old and has worked on numerous property transactions.
He has also run into legal trouble, and most recently was sentenced in 2015 to five years in federal prison after he pleaded guilty to defrauding the village of Riverdale, Ill., near Chicago, of more than $370,000 in public funds in connection with a marina redevelopment project.
Thomas spent close to two years in prison in the Chicago area and then about a year a half in prison in Duluth for the case, he said.
"I really enjoyed the people from Minnesota," said Thomas. "I thought it would be a great place to do business. People seemed really nice and seemingly accommodating for someone who has had issues in the past so I thought that would perhaps be a good place to start and try to buy property."
Thomas acknowledged that people might be concerned with his criminal history, but he says he's turned over a new leaf.
"I do what I'm best at and what I'm best at is acquiring real estate, deciding what the path is, and then selling it or keeping it long term and refinancing," Thomas said. "That's what I do, but I don't run the day-to-day. I don't cut checks to people."
Freedom Development Group is currently backed financially primarily by T2 Capital Management, a privately held real estate investment firm in Wheaton, Ill. The firm didn't respond to several requests for comment but directed inquiries to Thomas.
"They gave me a hell of an opportunity to get out of prison and to partner with me and get back on my feet," Thomas said.
Freedom Development has aspirations to acquire properties in several other states, Thomas said. His team is looking at possible acquisitions in Arizona, Florida, Denver, Raleigh, N.C. and Houston.