Two Golf Courses Change Hands for Eight Figures

VIZZDA—August 7th, 2013 — FireRock Golf and Country Club in Fountain Hills and the Arizona Golf Resort in Mesa were sold last week for a combined price of $11.8m. Both of these assets pricing in the seven figure range is atypical for golf assets, which typically transact in the low six figure range. Though the circumstances of the transactions were quite different, high valuations for recreational assets such as golf courses and resorts bode well for the Phoenix-area real estate market.

The first of these properties to change hands was FireRock, a 7,001 yard, par-72 course designed by Gary Pank in 1999 and boasting a 2-story 29,058 ft2 clubhouse. The sale price of $5.5m was furnished by the members of the club, who voted to buy out the original developers, MCO Properties, earlier this month. The vote was a response to professional golfer, Phil Mickelson, placing a bid on the property. More information on the circumstances of this sale can be found in this article from the Fountain Hills Times.

The Arizona Golf Resort is a 187-room golf resort with 54 condo units built in 1967 and renovated in 2004. The resort features an 18-hole, par-71 golf course that was completed in 1962. The property sits on roughly 120 acres at the southeast corner of Broadway and Power Roads. The $6.3m acquisition by Dr. Matthew Luxenberg represents a steep decline from a previous purchase price of $22.305m in April of 2007. Following default on a $19.2m CMBS note with JP Morgan Chase, the property reverted at trustee sale for $5,900,783 in August of 2010.

By:

Paul Dionne

Director of Analytics

Vizzda.com

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Settlement Reached in Suit Over Paradise Valley Ritz Carlton

VIZZDA—February 14th, 2013 — Jerry Ayoub of Five Star Development, LLC and iStar Financial—represented by its Senior Vice President, David Sotolov—have filed a settlement agreement with the US District Court for the Southern District of New York, resolving their longstanding dispute. The settlement includes an amended and restated carve-out guaranty, which absolves Mr. Ayoub of personal liability contingent on satisfaction of the terms of the Settlement.

Per the terms of the agreement, Five Star Development forfeits a $13.3m letter of credit currently in escrow and must pay an unspecified amount to iStar by July 22nd, 2013 or face monthly escalations of the settlement payment amount. iStar cannot initiate foreclosure proceedings on the property until after the settlement termination date. Additionally, the amount of collateral secured under the agreement was expanded to include the portion of land acquired by Mr. Ayoub over the course of the suit.

The suit—as well as four others in various stages of adjudication between Mr. Ayoub and iStar Financial—stems from an $112,025,000 credit facility established between Five Star Resort Development, LLC as borrower and iStar RC Paradise Valley, LLC as lender. Both Mr. Ayoub and iStar contend that the other party was in breach of the loan agreement. The unpaid principle balance on the loan is stipulated to be no less than $71,480,243. This settlement resolves all outstanding legal action between these parties.

The planned development was to include a 225-room Ritz Carlton-branded hotel, luxury condominiums, single-family residences and a retail center. It sits on approximately 120 acres at the northeast corner of Mockingbird Lane and Lincoln Drive in Paradise Valley. While Mr. Ayoub is free to pursue entitlement action on the property, the project will not go forward as originally envisioned due to time constraints placed on the site by Ritz Carlton and the Town of Paradise Valley.

iStar RC Paradise Valley, LLC v. Five Star Resort Development, LLC Settlement Agreement 

By:

Paul Dionne

Director of Analytics

Vizzda.com

Guaranty Bank and Trust Co. Sells Crown Plaza San Marcos Resort in Chandler

VIZZDA—January 28th, 2013 — Interwest Capital Corporation of La Jolla, CA has acquired the historic San Marcos Resort and Golf Course in Chandler for $11m. The seller, Guaranty Bank and Trust Co, held the property as Real Estate Owned for over a year following the bankruptcy of the resort’s prior owners. Interwest financed the transaction with $14m in seller carry debt, maturing January 28th, 2018.

Crowne Plaza San Marcos Resort

The resort—located at the Southwest corner of Arizona Avenue and Chandler Boulevard—was originally constructed in 1912, underwent major renovations in 1960 and 2006 and was expanded to 295 rooms in 1987. It is comprised of four 4-story buildings totaling 180,842 ft2 on a 123-acre campus, zoned PAD. The 18-hole par 72 golf course measures 6,626 yards from the tips and has a slope rating of 119.

The most recent arms-length transaction occurred on November 23rd, 2004 when Robert Bigelow of Bigelow & Co. paid $12,485,371 for the hotel and $1,214,629 for the golf facilities for a total $13.7m with an additional $1,254,669 in fixtures. The $8m in new debt issued by Guaranty with the sale was modified on May 31st, 2007 to increase the principal to $23m. Guaranty noticed the property on December 31st, 2010. On March 18th, 2011, Bigelow declared bankruptcy and the property reverted to Guaranty as beneficiary on December 6th, 2011 with a $16.5m credit bid.

The sale of the Crowne Plaza San Marcos comes after a purchase of nearly three acresof land immediately South of the Hotel. On January 18th, 201 3, an entity formedby Robert Furst of Oakstream Investors acquired 3.27 acres of finished lots, zoned MF-2, comprised of 19 lots with dimensions of 50’ x 150’ as part of the original Chandler plat for a total purchase price of $1,348,607 or $9.47 per square foot. Thesale is comprised of multiple transactions and trades; sold by the Bogle Family. Furst concurrently traded 2 of the lots to the Hall family, retaining 2.93 acres.2.41 Acres of this assemblage previously sold in 2006 for $1.5M or $14.29 PSF.

VIZZDA tracks built property types and land- enabling our clients to have a comprehensive view of activity! 

By:

Paul Dionne

Director of Analytics

Vizzda.com

ACCOR North America Exercises Purchase Option on Six Phoenix-Area Hotels

VIZZDA—September 18th, 2012—Gregg Toon, Treasurer of ACCOR North America, has exercised a purchase option on six Phoenix-area hotels currently leased and operated by Motel 6. The sale is the Arizona portion of a broader disposition by the Herrick Company including 38 similar hotel properties in California, Illinois, Indiana, New Mexico, New York and Oregon, 23 retail bank branches in Indiana and Kentucky, 27 distribution centers, a corporate headquarters in Illinois and an 181k ft2 hospital in Indiana.

The sale price for this portfolio is reported by the Herrick Company to be in excess of $550m, of which the Maricopa county portion accounts for roughly $35.28m. According to Norton Herrick, Chairman of the Herrick Company, “With these transactions, we have executed on our strategy to profitably dispose of certain assets and have successfully positioned the company for future growth.”

Information on the individual properties is broken out below:

Flag

Units

Sub-Market

Price

Price Per Unit

Studio 6 #6030

140

Deer Valley

$4,989,202

$33,855.30

Motel 6 #1315

101

Tempe

$4,615,248

$45,695.42

Studio 6 #6031

149

Ahwatukee

$4,477,231

$28,546.10

Motel 6 #1329

61

Airport

$3,975,906

$61,919.00

Motel 6 #1303

60

Tempe

$2,157,779

$36,962.98

Motel 6 #1304

351

SW Phoenix

$15,134,418

$43,118.0

Herrick had previously acquired the properties February 28th, 2001 for a combined price of $33m or $38,291 per door. These properties—as well as 32 others in the aforementioned states—were secured by a $165,955,396 cross-collaterilized deed of trust with Berkshire Hathaway Credit Corporation issued at time of acquisition and released with the exercise of the ACCOR purchase option.

The option to purchase arose from a master lease between Herrick as lessor and ACCOR North America as lessee whereby ACCOR would manage the portfolio for a period of 25 years with two 10-year options to extend; following consummation of the master lease, ACCOR North America then entered into a similarly termed sublease agreement with Motel 6 Operations LLC, the entity responsible for the operation of the hotels. ACCOR will now assume fee simple ownership of the properties and continue in its capacity as their manager.

By:

Paul Dionne

Director of Analytics