The former Famous Dave's BBQ location that will soon become the region's first Chick-fil-A restaurant will be owned by a Rochester developer who has been rapidly expanding into the Buffalo region.
Morgan Cheektowaga LLC, a limited liability company connected to Rochester real estate developer Robert Morgan, bought the former barbecue restaurant building at 1753 Walden Ave. in Cheektowaga, near the Walden Galleria, on Wednesday.
The seller was Team R N B Wisconsin LLC, a franchisee of Famous Dave's of Appleton, Wis.
The 1.39-acre property contains a 7,500-square-foot building, which at one time was a Bob Evans restaurant, said Ben Schiller of Pyramid Brokerage Co., who handled the sale for Famous Dave's. He said the building is expected to be knocked down and replaced with the new restaurant for Chick-fil-A, which will lease the site from Morgan's company.
"This was a complex transaction," Schiller said. "There were various challenges and moving parts to the deal, but the deal successfully closed."
Morgan Cheektowaga LLC on Wednesday reported paying $2.234 million for the property, according to the deed filed with the Erie County Clerk's office. County clerk records show the company also recorded a mortgage on Wednesday for $2.7 million from U.S. Income Partners LLC, which is registered to the address of Monroe Capital.
Morgan, by email, called the new debt on the property a "development loan," and said the project includes extra costs for construction, environmental cleanup and site work.
Morgan, through Morgan Management and Morgan Communities umbrella companies, has built a fast-growing commercial real estate empire across the country, first buying up mobile-home parks and manufacturing housing communities before shifting into multifamily apartment buildings more than 12 years ago.
The Buffalo News has previously reported that the way Morgan's companies finance some of their real estate deals involving apartment complexes has drawn scrutiny from the FBI and the U.S. Attorney's Office in Buffalo. Two sources previously told The News that investigators have focused on the rent rolls and other documents submitted to lenders to justify what Morgan's companies borrow. Many of those loans have since been packaged as securities and sold to investors on Wall Street, including through Fannie Mae and Freddie Mac.
The Buffalo News reported in October that public records show Morgan's companies have borrowed more money on some real estate deals than the companies publicly recorded paying for the properties, perplexing other local landlords, developers and brokers. Lenders will typically not approve loans for more than 80 percent of a property's value, and real estate experts generally agree that a sale price is the best indicator of that value.
Today, his companies own and operate more than 36,000 apartments in 14 states, along with remaining mobile-home parks, self-storage properties, retail strip plazas and some commercial office space. His biggest geographic concentrations include Rochester and Pittsburgh, but he has grown rapidly in the Buffalo market in the past few years.
In this case, Morgan Cheektowaga LLC didn't turn to a bank for money.
According to its website, Monroe Capital specializes in "short-term, hard asset-based" interest-only commercial real estate loans, ranging from $100,000 to $10 million. It offers loans for acquisitions, rehabilitation and real estate development, as well as bridge and mezzanine loans. The loans are typically repaid once the borrower can arrange lower-cost funding.