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 132^nd 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 31^st 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.

To Contact the Author:

Paul Dionne – pdionne@vizzda.com

MIG Continues Multifamily Buying Spree

By: Paul Dionne | Vizzda

Less than two months after his brother, David Merage of Consolidated Investment Group, closed on the distressed Block 1949 Apartments in Tempe, Greg Merage of MIG Real Estate has acquired Symphony Apartments in Chandler for $34.164m or more than $150k per unit. This is the second major multifamily acquisition by MIG this year following the $41.85m purchase of the Quadrangles in April and the fourth major acquisition since the start of 2013, totaling $126.564m for 1,048 apartment units and a 90k SF office building. MIG put $10.65m down and secured an additional $24.85m in funding through a Fannie Mae loan originated by CBRE Multifamily Capital.

The 234-unit apartment complex is comprised of fifteen 2 and 3-story buildings totaling 246,611 net rentable square feet completed in 1998 on a 15.30 gross acre site featuring two resort-style pools. The units are a mix of one, two and three bedrooms with seven floor plans, detailed in the table below:

Unit	Number	Beds	Baths	SF
Handel	48	1	1	729
Mozart	33	2	1	1240
Mahler	55	2	2	1069
Schubert	22	2	1	1142
Beethoven	11	2	1	915
Bach	32	2	2	1022
Chopin	33	3	2	1262

The complex was converted to condominiums in 2005 under an agreement that stipulates to slightly smaller unit sizes, resulting in a net rentable square foot total of 237,476 for the project. The units are individually metered for electricity. 

The seller was Hartford Investment Management Company, who had previously acquired the property in 2010 when then-owner Graystar defaulted on a purchase money note secured by the property and transferred ownership to Hartford, deed-in-lieu. The previous arms-length sale of Symphony was in January of 2007, when the Greystar bought the complex for less than it's begin acquired for now: $34.164m or $146,000 per unit with $7.864m down and the $26.3m new debt which caused Greystar to give up Symphony less than five years later.

To Contact the Author:

Paul Dionne - pdionne@vizzda.com

Week in Review - June 13th, 2014

 By: Paul Dionne | Vizzda.com

New Entrant to the Phoenix Market Buys Chandler Multifamily

Oregon Pacific Investment & Development Company (OPID) of Portland, Oregon has completed the acquisition of Pinnacle Creek Apartment Homes in Chandler for $33.3m. The seller was a joint venture between Essex Property Trust as successor-by-merger to BRE Properties and Northwestern Mutual Life—which financed the prior land acquisition and development of the property. The sale was structured as a 1031 exchange and financed with $22.712m in new debt with CBRE Multifamily Capital, assigned at origination to Fannie Mae. OPID tendered the balance of the purchase price as cash.

Thirteen Danny's Family Carwashes Noticed for Trustee Sale

Legal entities formed by Danny Hendon of Danny’s Family Car Washes were noticed for trustee sale yesterday on thirteen properties spread across the Valley. These foreclosure filings come more than four years after Danny’s Family Companies and various entities entered bankruptcy in March 2010. Trustee sales are scheduled for September 16^th, 2014. Snell & Wilmer is trustee.

Phase II of Riverview Point Sold to Harvard Investments

A 19.55 acre parcel of undeveloped land near the Chicago Cubs’ new Cactus League facility was sold by Los Angeles-based real estate investor and developer, Montana Avenue Capital, for $5,798,286 or $6.81 per square foot. The buyer was Phoenix-based Harvard Investments as represented by its president, Craig Krumweide. Harvard Investment tendered $2,318,286.50 in cash and borrowed the balance of $3.48m from Western Alliance Bank.

Stapley Corporate Office Center Sold for $32.5m

The Stapley Corporate Center in Mesa has sold to Buchanan Street Partners for $32.5m or $180.48 per net rentable square foot. The all-cash transaction brings Buchanan Street Partners to $85.1m in Phoenix-area acquisitions in the last ten months, following their purchase of four office, flex and retail properties for $52.6m in September of last year. The seller was St. Louis-based real estate developer, The Desco Group, who originally developed the property. This sale marks Desco’s exit from the project, having already sold two other properties on site.

The Praedium Group Acquires Adobe Ridge Apartments  

New York-based multifamily investor The Praedium Group acquired the 224 unit Adobe Ridge Apartments in North Phoenix for $26.05m or $116,294 per unit. The transaction was pursuant to an April 9^th, 2014 purchase agreement and lists $9.916m as the cash down payment, though no new debt was issued in connection with the sale. The sellers were Donovan Waters of Farnum Properties.

Thirteen Dannys Family Car Washes Noticed for Trustee Sale

By: Paul Dionne & Hadden Schifman | Vizzda.com

Legal entities formed by Danny Hendon of Danny’s Family Car Washes were noticed for trustee sale yesterday on thirteen properties spread across the Valley. These foreclosure filings come more than four years after Danny’s Family Companies and various entities entered bankruptcy in March 2010. Trustee sales are scheduled for September 16^th, 2014. Snell & Wilmer is trustee.

The collection of properties were originally secured under six notes with three different banks: Comerica Bank, First National Bank of Arizona, and M&I Bank; but all of these notes were acquired by Verde Investments prior to yesterday’s filings. Verde Investments is a real estate holding company for DriveTime chairman, Earnest Garcia. The properties, original lenders and the manner in which the properties are held are delineated in the table below:

Property	Address	Location	Status	Original Lender
Danny's Family 83rd Ave Union Hills	18736 N 83RD AVE	N/NWC 83rd Ave & Union Hills Dr	Fee-Simple	Comerica
Danny's Carwash Raintree 101	14717 N NORTHSIGHT BLVD	W/NWC Loop 101 & Raintree Dr	Fee-Simple	M&I Bank
Danny's Family Desert Ridge	21001 N TATUM BLVD	SEC Tatum Blvd & Deer Valley Rd	Lease-Hold	Comerica
Danny's Family HappyValley I-17	2470 W HAPPY VALLEY RD	E/SEC I-17 & Happy Valley Rd	Lease-Hold	M&I Bank
Danny's Carwash Scottsdale Kierland	15515 N SCOTTSDALE RD	N/NEC Scottsdale Rd & Greenway Hayden Lp	Lease-Hold	Comerica
Danny's SanTan Village Gilbert	2870 S MARKET ST	NWC Market St & Santan Village Pkwy	Fee-Simple	FNBA
Danny's Family Camelback 20th St	1958 E HIGHLAND AVE	S/SWC Camelback Rd & 20th St	Lease-Hold	Comerica
Danny's Family 84th Ave & Bell	8369 W BELL RD	SEC Bell Rd & 84th Ave	Fee-Simple	Comerica
Danny's Family 3rd Ave & Bell	315 W BELL RD	SWC Third Ave & Bell Rd	Fee-Simple	Comerica
Danny's Crossroads Gilbert	4027 S GILBERT RD	SEC Gilbert & Germann Rds	Lease-Hold	FNBA
Danny's Family Scottsdale Bell	16610 N SCOTTSDALE RD	16610 N SCOTTSDALE RD	Fee-Simple	Comerica
Danny's Family Carwash PV Mall	12010 N TATUM BLVD	S/SWC Cactus Rd & Tatum Blvd	Lease-Hold	Comerica
Danny's Tempe Marketplace	2090 E RIO SALADO PKWY	E/NEC Rio Salado Pkwy & McClintock Dr	Lease-Hold	FNBA

The largest of these notes--$30m secured by eight of the properties and originally issued by Comerica Bank—was first acquired in 2011 by Atayala Capital Management as part of their Special Opportunities Fund. On March 13^th, 2014 Verde Investments acquired the note with the aid of $19m in financing from Midfirst Bank, secured by the underlying pool of loans. As part of the reorganization, the note was restated in 2011 to reduce principal to $26,505,000.

The now-defunct First National Bank of Arizona lent $20,192,150 in three construction notes during 2007- secured by a one property each. Following the 2008 collapse of First National Bank of Arizona and its affiliate, First National Bank of Nevada, the loans were acquired by the FDIC as receiver and sold in a Structured Asset Sale to Sorenson Group Management of Utah. Verde Investments was able to acquire those notes from Sorenson Group in April of this year; described in the assignment as a $15m and $419,741 re-stated notes.

M&I Marshall and Ilsley Bank loaned two construction debts of $4.516m and $7,256,138 in 2005, secured by two of the thirteen. In 2010, M&I Bank was acquired by Bank of Montreal as parent to BMO Harris Bank. Following the merger, BMO Harris sold the two notes in October 2013 to Dallas-based Hudson Advisors--an affiliate of Lone Star Funds. Verde acquired the notes from Hudson in May of this year.

Of the thirteen properties noticed yesterday, seven are held as leasehold interest and six are fee simple. VIZZDA has already tracked one of the assets transacting to a new owner-- Mr. Bill Levine and Mr. Jerry Simms acquired the 15515 N Scottsdale property near the Kierland on Friday for $6.5M. In this case, they acquired the ground-lease interest from the original lessors- the Notice of Trustee sale still secures improvements.