[Source: Milwaukee Business Journal] — Main Street Ingredients, a La Crosse company that manufactures and distributes food-processing ingredients, has been selected to buy the “opulent” Chateaux on Central brownstone project in Phoenix for $7 million. The unfinished residential development at the northwest corner of Central Avenue and Palm Lane has been financially troubled since construction started in 2005. All forward movement stopped when the lender, Mortgages Ltd., took it back in 2008 shortly before that company was forced into Chapter 11 bankruptcy protection.
Mark Winkleman, chief operating officer of ML Manager LLC, said MSI West Investments LLC submitted the winning bid for the Chateaux. Closing on the property is scheduled for Friday. ML Manager is the court-approved entity administering the Mortgages Ltd. loan portfolio in the wake of the lender’s bankruptcy. The Chateaux is one of the first Mortgages Ltd. properties to be sold off.
Dave Clark, CEO of Main Street Ingredients of La Crosse, confirmed that his company is behind the winning bid. Main Street recently created MSI West, a limited-liability company registered with the Arizona Corporation Commission. The company has purchased real estate in other states and started looking around the Phoenix area last year. “We like what we see in downtown Phoenix,” Clark said. “We feel this will be a good investment, but we’re not here to turn a dollar.”
The project was designed as 21 five-story residences with private elevators and rooftop terraces. The announced prices ranged from $2.8 million to $4.5 million per unit, but none were sold. Desert Hills Bank provided the first construction loan, but the relationship soured when the bank filed a lien on the property. The late Scott Coles, then CEO of Mortgages Ltd., stepped in to salvage the project, but Coles committed suicide on June 2, 2008, thrusting the entire Mortgages Ltd. loan and property portfolio into limbo. Within a month of Coles’ death, several borrowers forced Mortgages Ltd. into Chapter 11 bankruptcy.
[Source: Max Jarman, Arizona Republic] — Bashas’ Inc. has asked the U.S. Bankruptcy Court to void its leases on planned AJ’s Fine Foods and Food City stores in Phoenix and El Mirage. Bashas’ earlier signed leases for stores in the CityScape development in downtown Phoenix and in a retail center at Thunderbird and Dysart roads in El Mirage. Work has not started on the stores, and Bashas’, which has been operating under Chapter 11 bankruptcy protection since July, contends it would be a financial hardship to move forward with the new stores.
In bankruptcy, the court has the power to terminate leases with no repercussions to the tenant. Bashas’ earlier notified the prospective landlords of their intent not to occupy the stores. At $28.50 per square foot, the CityScape lease for 9,500 square feet would have cost $271,000 per year, and the El Mirage lease at $12.15 per square foot for 55,000 square feet would have cost $668,000 per year, according to court documents.
Since filing for Bankruptcy Court protection, Bashas’ has closed or decided not to go forward with more than 30 stores. More stores could be closed under terms of the Chapter 11 reorganization plan the company is expected to file with the court later this month. The plan is said to include the Basha family’s continued ownership of the chain and the closure of an unspecified number of additional stores. [Note: Read the full article at Bashas’ asks to void lease at downtown Phoenix CityScape project.]
[Source: Arizona Republic from U.S. Bankruptcy Court records] — Bankrupt construction lender Mortgages Ltd. has reached settlements with seven developers that account for more than one-half the company’s $925 million loan portfolio. Under the agreements, Mortgages Ltd. will subordinate investor interest, find additional capital for certain borrowers, and reduce interest rates for others. The borrowers agree to drop pending lawsuits against the company.
- SOJAC I LLC — Proposed Jackson Street Entertainment District in downtown Phoenix.
- MK Custom Residential Construction LLC — Various condo projects in central Phoenix.
- Grace Communities — Hotel Monroe in downtown Phoenix, X Wine Lofts in Scottsdale, and others.
- University & Ash LLC, Roosevelt Gateway LLC, Roosevelt Gateway II LLC — Various proposed condo developments in Phoenix and Tempe.
- Rightpath Ltd. Development Group LLC — Main Street Glendale near University of Phoenix Stadium.
- Avenue Communities LLC — Centerpoint Condominiums in Tempe
- Bisontown LLC — Residential communities.