One of the Valley’s largest and most influential developers is considering bankruptcy as its construction debt continues to mount.
Phoenix-based Opus West Corp., the Valley’s second-most-prolific commercial builder in 2008 after retail giant Vestar Capital Partners, confirmed Friday that it has hired an attorney to “explore restructuring options.”
Because of its size and long history, Opus West is considered a bellwether of the local commercial development industry.
Right now, that industry is in serious trouble. more…
It was Scottsdale’s biggest Super Bowl party, and promoters hoped to cash in on the much-hyped event that included
Tired of watching his 401(k) vanish like a mirage, Ed Sandidge pulled $50,000 from his account in March and invested it in real estate, betting that the long-term play in Buckeye’s housing market would pay off more than the stock market.
Sandidge, president of Scottsdale financial firm
“I just got tired of watching my money disappear,” he said.
More investors are pulling money from their individual retirement accounts and 401(k)s and investing in alternative assets such as real estate, oil and gas refineries, private businesses and precious metals.
The stock market crash in 2008 — which saw the Dow Jones Industrial Average sink 32 percent and the Nasdaq nearly 41 percent — cracked millions of nest eggs, prompting investors to trade some of their stake in the equity markets for illiquid assets, either through their employer-offered retirement plans or by establishing self-directed accounts.
“People just want more choices,” said J.P. Dadhah, president of
The
Under federal law, individuals cannot administer their own retirement accounts, so approved custodians such as Entrust
Entrust charges a one-time account setup fee of $50, then $250 for every asset held and a $95 fee when a client buys or sells an asset.
Real estate is the preferred alternative investment, especially in
Nevertheless, it remains an attractive alternative, especially if you have staying power.
Barbara Mackerman can attest to that. In April 2008, she purchased a 2,200-square-foot, four-bedroom home in
Given Wall Street’s collapse shortly after that investment, Mackerman likely will turn a nice profit when the housing market recovers. For now, she’s renting out the property for $1,450 a month.
“I think we made the right decision at the right time,” said Mackerman, director of finance at Sunrise Health and Hospice in Gilbert. “In the long run, we might be further ahead because of what’s happened to the stock market. Time will tell.”
Valley companies that offer alternative investments say business is up, especially since the stock market tumbled, obliterating millions of retirement plans in a matter of months.
More than $1 million a day is traded at
“This gives you an opportunity to control your investment,” said Cromwell. “I believe self-directed IRAs will be the wave of the future.”
Swiss America manages more than $1 billion in assets for more than 40,000 clients.
For decades, advisers and investment firms touted the stock market as the premier outlet for investing 401(k)s and IRAs, while trusts avoided the illiquidity of private-sector investments. But that sentiment is changing in the wake of Wall Street’s historic collapse, which buried some of the nation’s largest financial firms — and countless retirement dreams. Trusts are taking a more entrepreneurial position now.
“People are very quickly learning there is risk in all levels of investing,” said Glen Hinshaw, managing partner of HSL Financial Group LLC.
The
“We only invest in businesses we know,” Hinshaw said. “A lot of wealth is still sitting in small business.”
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Swiss America Trading Co.: www.swissamerica.com
A veteran
Carl Mulac, a former division president of
“I met them about a year ago. They were looking to invest in down markets, which is something they have done before,” Mulac said.
He isn’t saying how much JEN Partners is putting in, but
The property was partially developed in 2007-08 by Merit Homes, a small Phoenix-based home builder; but the project reverted to the lender, National Bank of
All of these transactions have taken place during the past three months. Mulac did not disclose financial details.
He’s been on a fast track since leaving his position with Engle Homes on April 15. The Florida-based home builder, owned by Tousa Inc., is in Chapter 11 bankruptcy and has departed the
“It was time to do something on my own,” he said.
Mulac is looking to buy several projects that have ground to a halt, but he would not disclose which ones. He said he decided to start with the
Frank Owens, a researcher and consultant to the home building industry, believes Mulac is making a good move by focusing on an infill site.
“The private builders will be in a better position to do infill than the public builders will be,” he said. “Public builders have to rely on volume, so they gravitate to the outskirts.”
The key will be pricing and repositioning, Owens said.
“To do a startup at this time will be a challenge, but Carl has a long-term perspective,” he said. “He’s well-connected and he is well-respected.”
That Mulac was able to attract financial backing from JEN Partners impressed Owens. Founder Reuben Leibowitz is a real estate financier with market experience dating back at least two decades, and he is well-known nationally, Owens said.
“It’s very fortunate that Carl has gotten hooked up with them,” he said.
That’s not to say Mulac will have long purse strings, nor does he want that.
“The new model of home building is that it’s got to be light with a very skinny overhead structure,” Mulac said. “We’re going to keep the overhead very small, but provide great customer service.”
Another believer is housing consultant Jim Belfiore. He said smaller builders are more able to acquire land, particularly distressed property, at much lower prices, and thus allow more affordability when the homes are delivered to consumers.
“New startup builders … have the advantage of purchasing land and lots at lower prices than surrounding, existing competition … and knowing what home buyers want,” Belfiore said.
Mulac, he added, will bring expertise and agile thinking to the local market.
Carl Mulac
Company:
Previous experience:
Development: Arboleda Ranch
Location:
Specs: Gated community, 29 lots, homes 2,400 to 4,000 square feet
Web: www.josephcarlhomes.com
Mill Avenue in Tempe, one of the Valley’s few urban districts, has been the focus of much planning and discussion during the past five years. Large mixed-use projects, many with large residential and retail components, have been approved by the Tempe City Council and publicly embraced.
But with the economic climate — particularly in commercial real estate — still shaky, some of those highly publicized projects now are in trouble, in limbo or possibly out of the picture entirely.
Centerpoint
The most visible
Andrea Kalmanovitz, spokeswoman for Centerpoint developer Tempe Land Co., said the company still is negotiating with the U.S. Bankruptcy Court to obtain an estimated $75 million in financing needed to finish the project.
Another veteran local developer,
Retail and restaurants
Other retailers also have departed
More retail space will add to the inventory when Tempe Gateway opens later this month at
Only 1,300 of the 24,000 square feet of street-level retail has been leased by a UPS store. To make the dynamics more tenuous, Opus West is in the throes of financial turmoil and is meeting with attorneys to determine whether Chapter 11 reorganization is in its future, according to Opus Corp. spokesman Winston Hewett.
Still, Roberts is optimistic about the project.
“We’ve gotten a lot of fantastic feedback from the brokerage community, and we’ve got a lot of interest from restaurants and banks,” he said.
A block north of Tempe Gateway, restaurant proprietor Michael Monti says he’s treading water in one of the toughest down cycles his family-owned steakhouse has been through since it opened in 1954.
“Our volume is down quite a bit. It’s a rough time for
Besides running Monti’s La Casa Vieja, he’s partnering with local developer 3W Cos. on a mixed-use project called 100 Mill Avenue, which will incorporate his historic restaurant. Development plans have made it through the city’s entitlement process, but approvals came about the time the economy tumbled.
“We’re still hopeful, but we’re in limbo,” Monti said. “It will be at least 18 months to two years before anything happens with our project.”
Others on hold
Hayden Ferry Lakeside, a mixed-use development created by
Several other projects in the area are on hold. Two developers that confirmed they are waiting for the market to improve to get much-needed financing are
Kris Baxter, a spokeswoman for the city of
“They are staying because they know their
Meanwhile, DMB is trying to make the best of a difficult situation by reactivating a former Harkins Theatre, which it had planned to demolish for redevelopment of the 4.2 acres at the northwest corner of Mill and
DMB is leasing it for “affordable” rates to the community organization, according to Karrin Taylor, the company’s vice president of entitlements.
“(We’ve partnered) in an effort to revitalize and convert the theater space for use by local artists and community groups,” she said.
In the meantime, DMB is trying to lease space that’s been vacated by national retailers including Z Gallerie, which is in bankruptcy.
“They chose not to renew their lease,” she said.
The company’s leasing team also is looking at the possibility of luring a Trader Joe’s or Whole Foods to Centerpoint on Mill.
Baxter said those who remain committed to
“We think
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