Former business sues UNC real estate group

_CLARIFICATION: An earlier version of this story said Butternut Squash went out of business. Maisie Coborne, the restaraunt’s owner, said the restaurant terminated its lease with University Square after it was not offered a lease extension. _

The former owner of Butternut Squash restaurant is suing UNC’s real estate arm after she said the group failed to inform the restaurant about its chances of keeping a location in the redeveloped University Square.

Maisie Coborne, the owner of Butternut Squash, filed a lawsuit against Chapel Hill Foundation Real Estate Holdings, the University’s not-for-profit real estate group, last month.

In the lawsuit, Coborne said the real estate group misled her into believing she would be allowed to retain her restaurant in the development once the construction of the 123 West Franklin project ended.

123 West Franklin has long housed Chapel Hill favorites like Ken’s Quickie Mart, Fine Feathers and Time-Out restaurant. The site is slated to be demolished in 2014.

Coborne said in the lawsuit that the developers assured tenants in University Square they would be temporarily rehoused during construction and then allowed to return to their places of development. Coborne said the group’s assurances led her to refuse offers to sell her business, according to the lawsuit.

Coborne said she later learned the owners had no intention of allowing the tenants to return to their original properties. By that time, she said she was no longer able to sell her property. The restaurant has since gone out of business.

Gordon Merklein, executive director of real estate development for the Chapel Hill Foundation, said the project will include 125,000 square feet of office space and 50,000 square feet of residential properties along with other retail uses.

Merklein said the project was always open to allowing old tenants to return after it was completed.

“Ultimately, it was their decision as to whether or not they decide to move back into the redeveloped project,” he said.

Attorneys representing Coborne could not be reached for comment.

In the lawsuit, Coborne said the real estate company acted in bad faith with regard to informing her of the availability of space following the development’s construction.

The Chapel Hill Foundation should have made an accurate and full disclosure to Butternut Squash operators about all matters that might have induced the restaurant not to sell the business, Coborne said in the lawsuit.

Amy Delp, manager of eyecarecenter in University Square, said while the option of only a temporary absence might have been viable at the beginning of the process, it became clear that it was not a practical option for many University Square businesses.

“Just like a doctor’s office, it’s hard for us to pack up and move and then come back,” Delp said.

Delp said she will move across the street to a new suite in 140 West Franklin in December.

“I’m sad about moving and would have loved to stay,” she said. “But ultimately the plan that was offered to us was too much in limbo.”

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