The historic Dun Building emerged from court control and could be headed for new ownership.
The building was purchased for $1.4 million by the Independent Order of Foresters during a foreclosure auction Friday. The Toronto-based fraternal organization held a mortgage on the property and was owed $2.17 million by the prior owners. The fraternal group will attempt to sell the building for a higher price.
"We think the Dun Building is worth more than that and we think it will sell for more than that in the future," said Alan J. Bozer, an attorney with Albrecht, Maguire, Heffern & Gregg in Buffalo, which represents the fraternal group.
The historic building at 112 Pearl St., constructed in 1893, has operated under court-ordered receivership since May 1997 after the ownership group fell behind on mortgage payments.
The Dun Building Partnership L.P., which acquired the 10-story, multitenant office building in 1991 included local investors Michael S. Jordan and Michael L. Joseph.
Joseph, president of Amherst-based Clover Management, has said he sold his interest in the partnership several years ago but continued managing the property for the group.
The only other bidder at Friday's auction was Richard Greenspan, representing South Union Road LLC. Greenspan is an executive vice president of Clover Management and has also been involved with MLJ Advisors, another Joseph investment company.
The Dun Building fell victim to real estate trends plaguing most downtown office buildings. The fall of Goldome Bank and Empire of America Bank and defection of some downtown companies to the suburbs left high vacancy rates.
The glut of space on the market in the 1990s left many building owners dropping rents to attract and retain tenants. Sinking revenues left many owners unable to meet mortgage payments.
Some rents in the Dun Building fell as low as $10 to $12 per square-foot, Joseph has said.
The 33,000-square-foot building has lost several major tenants in the last two years, including Cheers Downtown Restaurant, Ticketmaster and the Cornell University School of Industrial and Labor Relations.
The building has an occupancy rate of about 20 percent.
The renaissance-revival style building designed by E.B. Green and W.S. Wicks is considered one of the city's architectural treasures.
Other downtown office buildings already in the hands of mortgagors, or in the foreclosure process, include the Cathedral Park building, the Lafayette Court Building and the Guaranty Building.