A legal scuffle could determine who controls the retail part of a prominent Whole Foods-anchored development on a rapidly changing part of Stonewall Street uptown.
Florida real estate firm Regency is accusing Charlotte developer Crescent Communities of deception in an attempt to squeeze Regency out of a deal to partner on Crescent Stonewall Station, the mixed-use development under construction that also includes 450 upscale apartments and two hotels.
In a lawsuit in N.C. Business Court, Regency said Crescent reneged on a previously agreed-upon deal to sell the Whole Foods and the remaining retail portion of the project to Regency for $17.25 million – despite the fact that Regency said it did the initial legwork to secure the upscale grocer as a tenant.
Crescent, however, maintains the agreement that it would sell the supermarket and surrounding retail to Regency was preliminary and non-binding, and that it bore the brunt of the development risk associated with the project, including “millions of dollars” in land acquisition, financing, design and other costs.
“We take the accusations made by Regency Centers very seriously. These accusations are without merit, and we will vigorously defend against them,” Crescent spokesman Tony Wilbert told the Observer.
Wilbert said Crescent does not expect the lawsuit to impact the construction timeline of Crescent Stonewall Station. The project is still expected to wrap up in spring 2018.
In its lawsuit, Regency said Crescent went “radio silent” after Regency confirmed with an outside, unaffiliated developer that $17.25 million was the market rate. Then in late 2015, Regency says, Crescent raised the selling price of the retail component to $25.5 million, without explanation.
Crescent, which as the master developer was listed as the initial landlord during the project’s construction phase, moved ahead with the project and broke ground in January 2016.
Representatives from Regency and Whole Foods could not immediately be reached for comment. McGuire Woods, which is representing Regency, declined to comment.
Regency has a long history of developing Whole Foods and currently owns or manages 23 shopping centers in which the Austin-based supermarket is the anchor. Regency said in the suit that its work on the Stonewall project dates back to 2010, when the firm started scouting locations for the grocer in uptown Charlotte.
Regency said it engaged Crescent about partnering on the deal in early 2013: Crescent, which had no prior experience in the development of a Whole Foods, would build the project, and Regency would take over the retail part.
“Without Regency’s initial invitation to join the development team, Crescent would not even be a participant in this business venture,” Regency said in the suit.
Regency is seeking compensation for the “significant efforts” it made to secure the Whole Foods, and negotiate details of the grocer’s 20-year lease. Moreover, Regency said, the existence of the Whole Foods will attract other profitable retail tenants.
Crescent Communities is behind a number of prominent developments in Charlotte, including Crescent NoDa, which includes 344 apartments and 7,500 square-feet of retail space near the Lynx Blue Line light rail extension.