A
Arcus-Lucia LLC, a company formed by Arcus Private Capital Solutions in partnership with
The land had been owned by
Element Homes had been formed by former Del Webb Corp. executives and was doing well at the height of the housing market. The local home builder fell on hard times in 2008 and scrambled to hold the business together.
In October 2008, the Phoenix Business Journal reported that JP Morgan Chase had foreclosed on a $125 million loan to Element Homes. Various subdivisions and land were taken back by the bank and placed into a company called EHJP Property Holdings, LLC.
Land Advisors Organization had the assignment to sell the bank-owned portfolio of 695 total lots, representing eight Element Homes subdivisions.
According to Land Advisors, Element Homes did not file for bankruptcy, but no longer exists as a company.
Scottsdale is looking at ways to help the southern part of the city bounce back from the recession’s impact on car dealerships, retail and real estate.
But don’t expect
Lane and some members of the Scottsdale City Council oppose incentives and breaks for specific businesses.
“I’m not an advocate of it,” said Lane.
The city can look at zoning and invest in infrastructure such as roads, but it is less likely to roll out a new set of tax breaks and subsidies. The mayor said the legal battle over the city of
The city has put together a McDowell Road/South Scottsdale Task Force to formulate ideas to help the corridor. The group had its first meeting last month and will send recommendations to the city early next year.
Tom Sadvary, chair of the task force and CEO of
Sadvary said his task force is looking at planning and zoning as possible ways to help spur economic development, but he acknowledged revitalization efforts likely will be more market driven.
“It’s going to need a shot in the arm,” he said.
Rick Kidder, CEO of the
“It’s going to need help probably more quickly than the market by itself will allow happen,” Kidder said.
He wants the task force and city to keep the door open to a number of options that could help the area.
“I haven’t seen a tremendous appetite at City Hall to do something dramatic,” Kidder said.
The mayor said he’s optimistic about
“We’re trying to connect a bunch of dots,” Lane said.
The mayor doesn’t hold much hope in car dealerships — which have been hit by the pullback in consumer spending save a brief respite brought by the federal “Cash for Clunkers” rebate program — bouncing back anytime soon.
One idea floating around is realigning McDowell Road between Papago Park and Scottsdale Road slightly to the north perhaps to create a new commercial corridor and better leverage commercial parcels in the area.
Lane and Kidder both are open to looking at that proposal. Scottsdale turned away plans by Westgate City Center developer Steve Ellman to build a hockey arena and then big-box stores, including Wal-Mart, at the former Los Arcos Mall site. The
SkySong hosts some small technology and health-related companies as well as operations for Ticketmaster. SkySong officials say 300,000 square feet of space have been developed at the site, which opened in 2008 and was envisioned to encompass 1.2 million square feet. About 700 workers are employed there though the center has not had the desired spillover benefits to South Scottsdale.
Lane said that while South Scottsdale has its challenges, “the area itself is not outlandishly depressed.”
Get Connected
ASU SkySong: www.skysongcenter.com
Scottsdale Area Chamber of Commerce: www.scottsdalechamber.com
Phoenix Business Journal - by Mike Sunnucks Friday, September 18, 2009
While much of the commercial real estate market, both locally and nationally, has been in lockdown since the global banking collapse, the apartment segment is gaining momentum this summer.
Things were dead in 2008, said Brad Cooke, vice president of multifamily investments at Colliers International in Phoenix. But so far this year, 18 transactions of apartment communities with 100 or more units each have closed, and 10 more are under contract, he said.
“Our market is moving,” said Cooke.
Bobby Bull, managing director of investment sales for
“Now that we’ve had about 20 deals in the market and there’s agency financing out there, we’ll see more sales in fourth quarter and even more in 2010,” Bull said. “Multifamily is going to be the preferred commercial real estate investment vehicle going forward.”
Even though apartments are selling at prices far below the high marks of early 2007, buyers and sellers are lined up to do business for several reasons.
Unlike other commercial properties, multifamily investors have access to financing through the Federal National Mortgage Association (Fannie Mae) and the Federal Home Mortgage Association (Freddie Mac). Multifamily investment traffic also is moving in part because of the nature of publicly traded real estate investment trusts, or REITs, many of which own large apartment portfolios.
Because REITs by law are required to meet certain financial criteria and pay dividends to shareholders, many of them have been selling properties to increase equity and to position themselves for a new round of buying. Another factor driving apartment transactions is the growing cache of lender-owned properties that banks want off their balance sheets after taking them back at foreclosure auction.
One such deal is the Wachovia portfolio, which included three apartment complexes — one in Gilbert, one in
“We had 230 signed confidentiality agreements and 60 bidders,” Bull said.
Cooke represented one of the potential buyers. “We had a buyer with deep family money from the East,” Cooke said.
Though Cooke thought he had a strong offer, Transwestern and Eastdil settled on a bid by HSL Properties of Tucson, which paid $40.5 million for the three apartment properties. Total time of the deal: 180 days. Wachovia’s loan to SJ Management was for $81 million.
“HSL did their appraisal before the call-for-offer date, which made them even stronger,” said Bull, adding it was a sweet deal for the buyer.
Banks willing to sell distressed properties at much lower prices will drive more activity, said Nick Ingle, director of capital markets for
“Asset values have declined dramatically, allowing investors to acquire properties at a low basis. Obviously that is extremely attractive but not overly unique in a market governed by foreclosure forces. What is unique is that apartment properties are performing rather well relative to office and retail properties,” he said.
Ingle also cites the availability of Fannie Mae and Freddie Mac money for greasing the transaction wheel.
“We believe when the market is down is the best time to buy,” said Ken McElroy, principal of MC Cos. in
A year ago, when most commercial real estate investors were in a panic, McElroy and partner Ross McCallister shifted into a counter-market, aggressive mode, a strategy it has employed for years. Though the company as it exists today was formalized in 2001, the partners have been involved in real estate development and investment since 1985.
In 2001, MC put most of its eggs in the condo-conversion basket.
“We got out of that before the crash. Then we got into work force housing. What we call work force housing really is something that was very nice in the 1980s and is very well located but needs some updating,” McElroy said.
That’s why MC was interested in Wickertree, the 226-unit complex in
Aimco has been selling assets across the country in response to lackluster stock performance this year. The company cited declining occupancy rates and rents for a 48 percent drop in funds for operations in second-quarter 2009 compared with the same time period last year.
McElroy said many other larger apartment REITs are selling assets in inland markets in order to invest more heavily on the East and
“There’s some nice properties being marketed (here) now. Wickertree had exactly what we were looking for,” he said.
MC paid $9.5 million for Wickertree with a down payment of nearly $2.4 million. The deal closed Aug. 24. With a 91 percent occupancy rate at closing, “this was a cash-flow play for us,” McElroy said.
The company is looking for more good deals, and so are plenty of others, Cooke said. “We have no problem finding buyers if you have a good property that is priced right,” he said.
Get Connected
MC Cos.: www.mccompanies.com
Colliers International: www.colliers.com
Transwestern: www.transwestern.net
Hendricks & Partners: www.hpapts.com
Apartment Sale Comparisons
Largest Sale 2007 (the largest apartment deal ever in Arizona): Bascom Portfolio
Sale Price: $428 million
Sale Date: June 2007
Properties: 12
Units: 5,178
Avg. Price Per Unit: $82,561
Avg. Grade of Property: Class B
Seller: Bascom Arizona
Seller Broker: Colliers International
Buyer: The Bethany Group, California
Buyer Broker: None
Largest Sale 2009: Wachovia REO Portfolio
Sale Price: $40.5 million
Sale Date: August 2009
Properties: 3
Units: 592
Avg. Price Per Unit: $68,412
Avg. Grade of Property: Class A
Seller: Wachovia (Wells Fargo)
Seller Broker: Transwestern, Eastdil
Buyer: HSL Properties, Tucson
Buyer Broker: None
Source: Colliers International
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The Maricopa
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