Skip to main contentEarlier this month, H. Naito Corp. shocked real-estate insiders by announcing that the Western Culinary Institute would lease 60,000 square feet in the moribund Galleria.
It wasn't the prospective tenant that surprised the real-estate pros (the Culinary Institute has been talking with the Naitos since the mid-'90s). Rather, it was that the Nov. 6 announcement was based on a letter of intent, not a lease.
"A letter of intent is not worth the paper it's written on," says Bob Scanlan of the real-estate investment firm ScanlanKemperBard. Craig Sweitzer of Trammell Crow, which previously tried to find tenants for the Galleria, called the move "fairly unusual."
Lurking behind the upbeat headlines--The Oregonian followed the initial news story with a glowing editorial and a feature on the culinary institute--may be an explanation for the hasty announcement. On Oct. 29, the heirs of Bill Naito filed suit in Multnomah County Court against Bill's brother Sam and Sam's son Verne, who currently control the Naito empire.
The suit accuses Sam and Verne of "breach of fiduciary duties and oppressive conduct" and asks that they either buy out Bill's heirs or give them half of the family's net assets, which were appraised in 2000 at $71 million. (Sam and Verne Naito were not available for comment.)
Bill's heirs previously won a 1998 lawsuit in which they alleged that Sam was guilty of similar behavior. The new suit alleges that Sam has stacked the company's directors against Bill's heirs, paid himself and Verne excessively, and continues to pay insufficient dividends.
Naito family watchers speculate the WCI announcement--which includes potentially spending $6 million to renovate the Galleria--will make it appear that Sam and Verne are actively managing the property, which has deteriorated since Bill's death. "It's interesting that a week after we filed suit they had a press conference announcing a deal which isn't yet in place," says Anne Naito Campbell, Bill's daughter.
WCI president Greg Ogdahl says that the timing of the announcement was the Naitos' decision and that he is unsure when an actual deal might be completed. "It could be two weeks, or it could be two months," he told WW.
WWeek 2015