[Source: Jahna Berry, Arizona Republic] — Financial woes at a luxury downtown high-rise could hurt property values at similar central and downtown Phoenix condominium complexes. Last week, the lender for the Summit at Copper Square took the first step toward foreclosing on 74 unsold units in the multicolored tower near Chase Field.
Scottsdale’s Stearns Bank Arizona issued a notice of trustee sale, which says the units will be sold to the highest bidder on Oct. 14. While a notice of trustee sale doesn’t always end in foreclosure, it’s a signal that the developer is having financial problems. If the bank does foreclose on the units, those unsold condos in the 165-unit building will be sold at a discount, said Diane Drain, a Phoenix attorney. She likened foreclosures to a “black mold” that lowers property values within the building. And, “if you have several condo developments around it, and they are all in hot water, the black mold seeps out more and more and more,” she said.
The Summit at Copper Square opened near Chase Field in 2007. The condominium complex at Jackson and Fourth streets hit hard times after the Valley real-estate market tanked. The developer has struggled to make debt payments because it has been able to sell only 91 units. The Federal Deposit Insurance Corporation shut down the developer’s bank. And he credit crisis has made it difficult for W Developments LLC to restructure its debt with its new lender, Stearns Bank Arizona. The notice of trustee sale says the loan principal is for $44 million.
Developer David Wallach said that loans for the project totaled about $64 million. The developer paid $40 million and as of last year, they owed about $28 million, including interest. Wallach said that his firm is working to avoid foreclosure. “Smart developers look at all options,” he said.
The Summit’s immediate financial problems will probably not impact the fortunes of downtown Phoenix or Wallach’s plans to help build a proposed Jackson Street Entertainment District, a cluster of restaurants, nightclubs and music venues, he said. [Note: Read the full article at Downtown Phoenix high-rise’s woes may hurt other area condos]