The last year has been a rough time for most in real estate, but especially everyone tied to the Centerpoint Project in Tempe. From the lender, Mortgages Limited Securities going bankrupt and their CEO committing suicide, to the teasing near completion of the soon to be iconic towers of Centerpoint Condominiums. People have been waiting to move in since May of last year and for the first time since the building stopped construction, they finally have some good news to sit on. Unfortunately for those people, their condos wont be done until the end of the summer.
There have been several posts previous to this regarding the situation between the lender and developer of Centerpoint. The primary lender, Mortgages Limited Securities went bankrupt in June of last year due to an enormous amout of defaulted loans with a portfolio totaling near $1 billion. Avenue Communities, developer of Centerpoint, halted construction slightly before that when they stopped receiving money from the lender. The CEO of MLS, Scott Coles, committed suicide in early June, and the bankruptcy proceedings followed soon after.
Over the last 9 months, the lender and the developer have been in and out of court trying to resolve the situation so the building can be completed and the lender can get some of their money back. Unfortunately, since MLS already gave Centerpoint, specifically Tempe Land Co. (a subsidiary of Avenue Comm.) $133 million, they do not want to give up their primary lending position to another financier that would be willing to finance the remaining $70 million for the project to be completed. The only way Tempe Land Co. could get out of this sticky situation was to also file for bankruptcy, which occurred last December.
Ken Losch, Principal of Avenue and the visionary behind the Centerpoint project was always publicly confident he had a new financier ready to take over and lend the remaining money necessary to complete the project. EFO Financial Group LLC, based in Florida struck a deal with Tempe Land Co. yesterday that calls for them to lend $43.3 million in “debtor-in-possession” financing to Centerpoint.
Before all of this becomes official, a hearing on Tempe Land’s disclosure statement, a document debtors are required to file outlining and reorganization plan, is scheduled for May 13 at 10 a.m. Currently, 40 non-refundable deposits have been placed on units in Tower I, which is now scheduled for an August completion. The second tower, which is currently half complete, is said to be completed within 3-5 years.
Avenue Communities also announced plans to decrease the pricing structure of the units and also offer units for leasing. No exact new prices have been announced, but they are most likely going to be much lower than the original $700-800 per square foot range.
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