Sunday, June 6, 2010

CityNorth sale delayed again

by Michael Clancy The Arizona Republic Jun. 5, 2010 12:00 AM

The CityNorth foreclosure sale scheduled for Wednesday was postponed a second time.

The sale has been rescheduled for June 16. It originally was scheduled to occur March 31.

Capmark Financial filed the foreclosure against the owners of CityNorth's High Street in late December. The owners, the Klutznick Co. and Related Urban Development, owe more than $290 million to Capmark.

The foreclosure is believed to be the largest commercial foreclosure in state history.

As before, no reason was given for the postponement. Elizabeth Hibbs of Quarles and Brady, the law firm that is handling the sale, said Capmark can postpone the sale indefinitely.

Capmark has declined comment.

The foreclosure affects High Street, the initial phase of the 144-acre project at 56th Street and Loop 101 in northeast Phoenix.

High Street's shops, restaurants, offices and apartments opened in November 2008.

Subsequent phases were supposed to open annually, but the economic slump derailed those plans.

No construction activity has taken place there in more than a year.

Unknown at this time is whether anyone will step into the void.

The current owners could avoid foreclosure by finding new financing or filing for bankruptcy. Refinancing with Capmark is unlikely, because Capmark is in bankruptcy.

The Klutznick Co. has kept up to date on payments to the Arizona State Land Department on the remainder of the property but has been unable to secure financing for later phases of the project, which would include large department stores, other shops and outdoor areas.

Phoenix's $97.4 million economic-development agreement with CityNorth hinges on completion of Phase 2 as originally envisioned.

CityNorth sale delayed again

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