Archdiocese of New Orleans sells real estate in bankruptcy | Business News
More than two years after filing for Chapter 11 bankruptcy protection in the face of mounting lawsuits related to past child sexual abuse, the Archdiocese of New Orleans is beginning to raise cash by selling some of its vast real estate holdings.
Attorneys for the local Roman Catholic Church will ask a judge this week to allow two separate property transfers to move forward. One is the sale of a former 12-story office building at 1000 Howard Ave. to a Lafayette-based investor. The other is the sale of a parking lot on Loyola Avenue behind the Howard Avenue building.
Together, the deals would generate nearly $10 million for the local church, and follow property sales totaling some $1.9 million earlier in the bankruptcy process.
It’s unclear how far the millions raised by the property sales will go to resolving the 450 abuse claims levied at priests and other clergy who served in the archdiocese. And it’s also not known what other financial steps Archbishop Gregory Aymond and his advisers will take to pay off what is expected to be a multimillion-dollar settlement with abuse victims.
That’s in part because the case is still slowly unfolding in US Bankruptcy Court, where some of the proceedings are kept from public view.
When the New Orleans Catholic Church joined two dozen other US archdioceses by filing for bankruptcy protection in May 2020, it listed $243 million in assets and $139 million in liabilities.
Archbishop Gregory Aymond at his office at the Archdiocese of New Orleans on Monday, June 24, 2019.
At the time, Aymond said that the church, which serves 500,000 Catholics across 112 parishes, needed to seek Chapter 11 protection due to the mounting costs of abuse settlements and the fallout from the pandemic.
Financial records have previously valued archdiocesan-owned buildings and land at some $70 million. But that estimate is likely significantly lower than what the properties would fetch on the market, because it is based on the prices that the archdiocese paid for the properties.
It also does not include the value of real estate owned by individual churches and church-related entities. The church has not publicly listed the estimated market value of its more than 200 pieces of archdiocesan-owned real estate.
The archdiocese declined to comment on the property sales or the bankruptcy proceedings more generally.
Still, attorneys involved in the case see the pending sale of two downtown properties as a step forward in the bankruptcy case, though not an indication that a settlement with survivors is at hand.
“We’re glad they’re doing it and they have consulted with us, but this doesn’t mean there has been a settlement or that we’re moving towards a settlement,” said Jim, Stang, an attorney with Los Angeles- based Pachulski Stang Ziehl & Jones, which represents the committee for unsecured creditors in the case.
Federal probe
Bankruptcy cases typically move slowly. A case like that of the archdiocese, which is wrapped up in allegations of child sex abuse at the hands of priests, is no exception.
Dozens of attorneys have spent the past two years arguing about whether the case should be dismissed because the archdiocese is not insolvent. They’ve also questioned how much information should be shielded from public view.
There are also other complications.
For instance, the FBI is investigating allegations that the former pastor of St. Peter Claver Catholic Church in Treme, who was removed from his post in 2021 after being accused of raping a child years earlier, may have misappropriated nearly $400,000 in parish funds.
The archdiocese confirmed last week it is cooperating with the FBI in its probe of the matter, which came to light in an audit the church had fought to keep private.
Archdiocese officials said that the incident is not related to the larger financial issues in the bankruptcy and that the alleged financial improprieties at St Peter Claver are an isolated incident.
The FBI also is looking into allegations stretching back decades that clergy may have taken children to other states to molest them, potentially in violation of federal anti-sex trafficking laws, The Associated Press has reported. The church had denied knowledge of that probe.
surplus property
Amid the federal probes, attorneys in the bankruptcy case are trying to come up with a settlement plan to compensate the hundreds of sex abuse survivors who have filed claims against the church.
Selling off property is a way to begin liquidating assets and raising funds for those settlements. To date, the church has completed the sale of just one major parcel, the former St. Elizabeth Ann Seton School Kenner, which a developer acquired at auction for nearly $1.9 million.
The sale of the Howard Avenue properties is considerably larger and is a relatively easy way for the church to generate cash because it’s surplus property, according to Stang.
“It’s a building they felt they didn’t need anymore and given its condition, maintenance costs and the damage it suffered in hurricanes, it was excess,” Stang said. “They need to raise cash and this was something that they apparently don’t need any more.”
The bankruptcy will allow the archdiocese to consolidate all of its historical abuse claims and attempt to move past them financially. But the process itself is expensive, noted Jason Berry, an author who has written extensively about the Catholic Church, the abuse crisis and church finances.
“The church pays heavily to lawyers, cutting down the funds available to survivors, many of whom need the money to rebuild fractured lives,” Berry said.
New developments
While the pending sales may not signal a settlement in the bankruptcy case, the deals are significant for what they mean for the potential redevelopment of Howard Avenue.
Lafayette-based Triple or Nothing, LLC, signed a purchase agreement with the archdiocese earlier this year for $8.3 million to acquire the Howard Avenue midcentury modern office building, which includes an attached parking garage and a parking lot.
The Archdiocese of New Orleans building at 1000 Howard Ave. in New Orleans, Monday, Oct. 3, 2022. (Staff Photo by David Grunfeld, NOLA.com | The Times-Picayune | The New Orleans Advocate)
Court records show the group has agreed to execute the sale by Dec. 30 and that a due diligence period expired Nov. 7, which means, with the court’s blessing, the sale deal will go forward.
Triple or Nothing, LLC is registered to Samer Mohd, a Lafayette investor who owns several businesses in Lafayette and several local investment properties in Mid-City and near Tulane Avenue.
Commercial real estate broker Parker McEnery, whose firm is representing the archdiocese in liquidating its real estate assets, would not discuss specifics of Mohd’s plans for the building site. But he said the investor plans to redevelop the site into a hospitality concept that would be new to the market.
“This would be a great deal for the Howard Avenue corridor,” McEnery said. “It’s a major redevelopment project.”
The other deal before the court is the sale of a parking lot located directly behind the Howard Avenue building. Local real estate development firm Mk RED has signed a purchase agreement to acquire the lot for $1.68 million, court records show.
Mk RED declined to comment on the pending sale or the firm’s plans for the property. But the firm’s portfolio includes several multifamily developments in Mid-City, as well as redevelopments of older homes and buildings.