Sunday, November 28, 2010

Lenders take back 2 Glendale office projects

Lenders have taken back two high-profile office projects in Glendale's sports-and-entertainment district at foreclosure auctions.

There were no other bidders at the trustee sales.

The Arizona Cardinals' Bidwill family planned to build a $1.2 billion "urban community" at the property dubbed cbd101, at Loop 101 and Bethany Home Road. The plan included building the tallest skyscraper in Arizona outside of Phoenix, 850 residential units, a public market, a working farm and solar panels above parking garages.

Not a shovel of dirt has been turned on the vacant farmland.

Last week, at auction, the lender, an investment fund run by Maryland-based Walker & Dunlop, took possession of the land, valuing it at $16 million. The Bidwills, through subsidiary Bethany Land Partners LLC, had used a loan of up to $46 million from the firm to buy the property for $55 million in 2007, near the height of the market.

The family made all its payments until the remainder of the loan came due in full this year, said spokesman Steve Roman. The family tried to restructure financing with the lender, he said, but "the parties were unable to arrive at a mutually agreeable resolution."

Roman said the subsidiary was independent of other Bidwill companies, such as the Cardinals, and will have no effect on them.

The Bidwill family continues to own other nearby parcels, including 129 acres made of grassy areas and parking lots near University of Phoenix Stadium known as Sportsman's Park East and West. The group recently received approval from Glendale to build ambitious projects on the two pieces of land over the next few decades. They would include a total of 4.5 million square feet of office and retail, 350 residential units and two hotels and buildings as tall as 200 feet.

The second foreclosed property involved Westgate City Center developer Ellman Cos. Ellman built a two-story, glass-front office building near Arena and high-end condominiums at 91st Avenue and Coyotes Boulevard. The building has sat empty for the past two years.

The lender, Minnesota-based Home Federal Savings Bank, took back the offices at auction in October for $5.6 million. Ellman Cos., through subsidiary Westgate Garden Office 1 LLC, had taken out an $8.4 million loan with the bank in 2008.

The foreclosure affected a limited portion of Westgate, spokeswoman Nicole Traynor said.

"Consequently, there is no negative effect on the future of Westgate City Center or on the financial health of the Ellman Cos.," she said.

Another Ellman subsidiary defaulted in May on a $177.1 million loan for 2,450 acres east of Fountain Hills, where 1,000 luxury homes and a resort were planned.

It's not unusual for foreclosed commercial projects to go to auction without bidders, unless properties are unique or valuable.

Some developers in the down economy let projects fall into foreclosure because "values declined so far there's no point in even trying to save your asset," said Iain Vasey, a Valley real-estate expert. Others bid for their properties at auction, attempting to repossess the property for its current worth.

Still other developers face foreclosure because banks demand repayment of commercial loans instead of renewing terms when they expire, which happens more quickly than home mortgages, typically in two to five years.

by Rebekah L. Sanders The Arizona Republic Nov. 27, 2010 12:00 AM

Lenders take back 2 Glendale office projects

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