616 Lofts LLC, the developer of mixed-use properties such as Lofts on Michigan, shown here, has filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Western District of Michigan. 616 Lofts LLC, the developer of mixed-use properties such as Lofts on Michigan, shown here, has filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Western District of Michigan. MIBIZ FILE PHOTO

Developer 616 Lofts files for bankruptcy

BY Friday, January 11, 2019 09:47am

GRAND RAPIDS — One of the most active development and property management firms in Grand Rapids in the years after the Great Recession now faces liquidation, MiBiz has learned.

616 Lofts LLC, a developer of approximately 500,000 square feet of residential and commercial space in the city, filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Western District of Michigan.

The company managed assets owned by individual investors, according to David Grinzinger, the regional property manager for Mt. Pleasant-based KMG Prestige Inc., which has served as the property management company for 616 Lofts’ mixed-use buildings since 2017.

In November 2018, 616 Lofts’ mixed-use properties rebranded as Lofts of GR LLC, which is owned by the same investors, Grinzinger told MiBiz.

“616 is no longer in existence,” Grinzinger said. “616 was just an entity that developed and managed assets. … No one that owns the assets or lives in any of them will be affected (by the bankruptcy). In fact, we think we can really improve the lifestyle of the folks who live there.”

616 Lofts developed and managed at least seven major mixed-use facilities in Grand Rapids, including Lofts on Alabama, Lofts on Michigan, and Lofts at 820 on Monroe.

In court filings on Dec. 31, 616 Lofts estimated its liabilities as between $1 million and $10 million, according to James Cook, a co-manager who signed the forms on behalf of 616 Lofts. The company listed its assets as $0 to $50,000.

In a notice to creditors, the company indicated it held no property.

After administrative expenses are paid, the company expects no funds will be available to unsecured creditors, according to the filing.

Grand Rapids-based creditors named in the filing include: 616 Holdings LLC, David & Wierenga PC, First Companies, FITB LLC, Rhoades McKee PC, Donald Visser, James Cook, and the Jeffrey L. Baker Trust. The Internal Revenue Service, Michigan Department of Treasury and Kent County Circuit Court also were included in the list. The filing did not indicate which creditors are secured or unsecured, or the amount each is owed.

Court records indicate that a meeting with creditors is scheduled for Jan. 30.

Grand Rapids-based law firm Wardrop & Wardrop PC is serving as legal representation for 616 Lofts, according to the filing.

Derek Coppess founded 616 Lofts in 2011 and developed more than 300 apartment units in Grand Rapids via rehabilitation and new construction projects.

The company’s 2017 joint venture with KMG Prestige turned over property management duties to KMG so Coppess could focus on projects, MiBiz reported at the time.

With that announcement, Coppess sent a letter to 616’s stakeholders, announcing that the company was “right sizing.” Coppess wrote the partnership would allow the company to “develop the 616 model across the state and nationally,” and that it would allow 616 to immediately seize opportunities in different assets classes, like affordable housing. It also included some in-house layoffs.

KMG Prestige manages about 32,000 apartment homes and commercial spaces, Grinzinger said. The firm “continues to grow at a very fast pace,” he added.

Grinzinger said Lofts of GR properties remain about 97-percent occupied, while the commercial spaces are completely full.

Neither Coppess nor attorney Robert Wardrop II responded to multiple requests for comment for this story.

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