Wednesday, September 3, 2014

True Life and Renova Exercise Reata Ranch Option

By: Paul Dionne | Vizzda

Just days before it was set to expire, local developer Taber Anderson’s True Life Companies—with backing from Russian Conglomerate, Renova Group—has exercised its option to purchase more than 160 acres of vacant land previously platted for residential development in Scottsdale. The $10.5m purchase price was fully financed by YAM Management—the real estate investment vehicle for founder and former chairman of GoDaddy, Bob Parsons. Parsons has made several acquisitions in the area recently and has financed the acquisition of distressed property by others in both Scottsdale and Paradise Valley.

Anderson took the site—located at the southeast corner of 132nd Street and Dynamite—through the entitlement process in 2007 and final plat of Desert Estates at Pinnacle Peak was approved in December of that year. Located within the 220-acre Reata Ranch assemblage, Desert Estates is 160.045 gross acres platted for 73 custom home lots for an overall density of 0.45 density units per acre. Plans changed in 2012, however, when plans to develop the property as a 330 room ranch lodging featuring thirty-five lodge units, seventy five cabins, 120 casitas and 100 villas.

The seller in the transaction was Paul and Pamela Austin of Toronto, Canada, in care of local real estate broker, Saul Moretsky. The Austins previously acquired this parcel in two transactions in 1985 and had also taken the property through entitlement prior to selling to Anderson for $19m in July of 2007 and carrying back $15.75m in purchase money debt. Anderson and Renova ended up returning the land to the Austins, but retained an option to purchase the property. This option was previously set to expire in 2011 but was modified to extend the deadline until August 31st of this year. The prior seller carry debt with the Austins was released with the current sale.

The planned lodging use—as well as Parsons’ financing of the deal—recall the recent settlement between Jerry Ayoub and iStar over the site of the planned Ritz Carlton in Paradise Valley. In that case, Parsons issued a $55m deed of trust secured by the Ritz Carlton site in June which allowed Ayoub to retain control of the troubled project. While it is unclear what percentage of the settlement amount is comprised of that debt, as that information was not disclosed in court documents, should either of these sponsors default on their obligation to YAM Management, Parsons can foreclose on the respective property at a much lower cost basis than would otherwise be possible in the open market.

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