Sunday, May 23, 2010

High-profile developer out of business - Phoenix Business Journal

by Jan Buchholz Phoenix Business Journal May 21, 2010

Grace Communities, a Scottsdale development firm that had several high-profile projects finished or in the works, is no longer in business.

“We shut our doors quite awhile ago,” said Ryan Zeleznak, one of the principals.

Four loans Grace obtained from commercial lender Mortgages Ltd. — to develop the Ten Wine Lofts in Scottsdale and the Hotel Monroe in downtown Phoenix, and to obtain two parcels of land in Scottsdale — are in default.

Grace also de­faulted on loans for property it purchased on the southwest corner of 44th Street and Camelback Road. Mortgages Ltd. had a second position on those loans and will not pursue settlements on them.

ML Manager LLC, the company administering Mortgages Ltd.’s loan portfolio following its Chapter 11 reorganization, has filed notices of trustee sales on all of the outstanding loans, but has postponed a few of them because of “ongoing negotiations,” according to Mark Winkleman, chief operating officer of ML Manager.

He would not elaborate on what those negotiations entail. Zeleznak would not comment, either.

The most recent notice of foreclosure was filed on a 9.7-acre plot of land near Highland Avenue and Scottsdale Road, dubbed Portales Place. Grace Communities was going to build high-end condos on the site, like downtown Phoenix’s 44 Monroe high-rise and the nearly completed Ten Wine Lofts near Scottsdale and Osborn roads.

Grace finished 44 Monroe, but failed to sell even a dozen units. In that case, the original lender was Corus Bank and the default was on an $87 million loan. The auction, which is being handled by trustee Brian Spector of Jennings, Strouss and Salmon PLC, has been delayed several times, but now is scheduled for May 28.

Grace also borrowed $27 million to restore a historic bank property down the street at Central Avenue and Monroe Street and convert it into the boutique Hotel Monroe. That property is vacant and little work was completed other than stripping the interior.

In all, Grace borrowed about $121 million from Mortgages Ltd.

High-profile developer out of business - Phoenix Business Journal

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