The unfinished residential development at the northwest corner of Central Avenue and Palm Lane has been financially troubled since construction started in 2005. All forward movement stopped when the lender, Mortgages Ltd., took it back in 2008 shortly before that company was forced into Chapter 11 bankruptcy protection.
Mark Winkleman, chief operating officer of ML Manager LLC, said MSI West Investments LLC submitted the winning bid for the Chateaux. Closing on the property is scheduled for March 12.
ML Manager is the court-approved entity administering the Mortgages Ltd. loan portfolio in the wake of the lender’s bankruptcy. The Chateaux is one of the first Mortgages Ltd. properties to be sold off.
Dave Clark, CEO of Mainstreet Ingredients of La Crosse, Wis., confirmed that his company is behind the winning bid. Mainstreet recently created MSI West, a limited-liability company registered with the Arizona Corporation Commission.
“We are looking to diversify,” Clark said. “We’re very excited about this.”
The company has purchased real estate in other states and started looking around the Phoenix area last year.
“We like what we see in downtown Phoenix,” Clark said. “We feel this will be a good investment, but we’re not here to turn a dollar.”
Clark said he didn’t want to talk about plans or other participants in the deal until the transaction closes, but said he expects the community and city officials to be pleased when that information is revealed.
He did not disclose whether the property would remain a luxury brownstone community of multimillion-dollar homes — the original vision of Phil and Mollie Anderson, owners of Pro Star Realty Inc. and founders of Central PHX Partners LLC, the Chateaux’s development entity.
The project was designed as 21 five-story residences with private elevators and rooftop terraces. The announced prices ranged from $2.8 million to $4.5 million per unit, but none were sold.
Desert Hills Bank provided the first construction loan, but the relationship soured when the bank filed a lien on the property. The late Scott Coles, then CEO of Mortgages Ltd., stepped in to salvage the project, saying he believed in what the Andersons were trying to accomplish.
According to Winkleman, Mortgages Ltd. loaned Central PHX Partners $37 million. When that was not enough to complete the development, Coles took back the property in spring 2008.
In an April 2008 story by the Phoenix Business Journal, Coles said the loan was in default. “I always try to work with these guys, but I have to protect my investors,” he said in that story.
Coles committed suicide on June 2, 2008, thrusting the entire Mortgages Ltd. loan and property portfolio into limbo.
Within a month of Coles’ death, several borrowers forced Mortgages Ltd. into Chapter 11 bankruptcy. After more than a year, a reorganization plan was put into place with Winkleman, former commissioner of the Arizona State Land Department, named to administer the loans.
Winkleman said his sole responsibility is collecting on those loans, either from the borrowers or through foreclosure actions, and paying investors whatever can be collected from the proceeds. Winkleman said several bids were submitted prior to the Chateaux on Central auction.
“We received several offers, but this buyer took the time to carefully inspect the project and proved to us that they had the funds to close the transaction,” Winkleman said.
According to Mainstreet Ingredients’ Web site, Clark founded the company in 1989 “with an in-depth understanding of the dairy and food markets and a commitment to the highest possible standards for the food industry.”
The company employs food scientists who have created trademarked food stabilizers, protein products, and dairy-based and bakery ingredients. The company shipped 125 million pounds of product last year, according to the site.
Get Connected
Mainstreet Ingredients: www.mainstreetingredients.com
Chateaux on Central: www.chateauxoncentral.com
ML Partners LLC: 623-234-9560
