Developers lose luxury Saguaro Ranch

Below find an excellent article, from the AZ Daily Star, regarding Saguaro Ranch. Saguaro Ranch is a luxury development (most homes have a list price above $2million) located in Marana. There is some incredible value and investment opportunities in Sagoaro Ranch now!!!

By Dale Quinn Arizona Daily Star Arizona Daily Star | Posted: Sunday, June 12

“Saguaro Ranch, the luxury development in the Tortolita Mountains northwest of Tucson, has gone back to its lenders after a lengthy battle in U.S. Bankruptcy Court.

Kennedy Funding Inc. and Anglo-American Financial LLC, the beneficiaries on the loan in default, were the only bidders at a trustee sale Thursday. They won the auction with a bid of $14 million.

The lenders filed a foreclosure notice in late February because the developers, led by Stephen Phinny, defaulted on a $50 million loan recorded in December 2005.

Saguaro Ranch Investments LLC and Saguaro Ranch Development Corp. are listed as borrowers on the loan, documents in the Pima County Recorder’s Office show.

The delinquent property, in Marana near North Thornydale and West Moore roads, includes the upscale McClintock’s Restaurant, which recently said it was shutting its doors for the summer.

After the trustee sale, Kennedy Funding and Anglo-American Financial released a statement saying they would work closely with the town of Marana, along with neighbors and brokers, to move the project forward.

“A new sales program along with announcements about the reopening of McClintock’s Restaurant will follow over the course of the next several months,” the companies said. “Kennedy and Anglo view Saguaro Ranch as one of the brightest jewels in Arizona and are excited about this tremendous opportunity.”

In an unsuccessful effort to stop the foreclosure auction, Phinny’s attorney, Eric Slocum Sparks, filed a motion June 3 for an emergency stay. Sparks argued the sale would hurt the developers’ ability to pay back the lenders and other creditors.

“Many workers and unsecured creditors will be left unpaid and without further employment if the trustee’s sale goes forward,” Sparks wrote. “Saguaro Ranch employs over 27 people who work at the property. At the same time, Kennedy will not be harmed by a stay.”

While she didn’t grant the stay, U.S. Bankruptcy Judge Eileen W. Hollowell did give Phinny a chance to delay the sale for 10 days if he delivered a $5 million bond to the lenders’ attorney.

But that didn’t happen.

Phinny – whose grandfather Daniel F. Gerber founded the iconic baby food company Gerber Products Inc. – had high hopes for Saguaro Ranch before the housing crash. He blasted a tunnel through the mountains to reach a pristine desert setting and touted the project as a world-class development. Lots there sold for about $1 million.

But the project struggled as property values plummeted. Several Saguaro Ranch development companies filed for Chapter 11 bankruptcy protection in February 2009.

In previous interviews, Sparks said a third amended plan, which made changes requested by Hollowell, would allow Saguaro Ranch to emerge from bankruptcy. Lots were beginning to sell, he said, though the deals were contingent on the judge’s approval of the plan.

There was $6 million in escrow ready to close, and that money could have been used to repay Kennedy Funding and Anglo-American Financial.

In a summary of the third plan, Hollowell said Saguaro Ranch planned to pay Kennedy Funding and Anglo-American Financial $17.25 million over five years at 6 percent interest. The payments would be made from the net proceeds of 131 lot sales, with an average price of $500,000 per lot in the first year with subsequent increases of 5 percent per year.

The plan also included $3 million from Phinny’s mother, with part of that money going to pay Pima County property taxes. Phinny himself testified at confirmation hearings that he held a partnership worth $4 million.

The sale of a casita lot would bring another $3.25 million.

But ultimately, Hollowell found that Saguaro Ranch didn’t have enough new cash or collateral to make the plan work and denied its confirmation.

Many of the potential sales were from parties who have personal relationships with Phinny or individuals who already own property at Saguaro Ranch, Hollowell wrote. Also, lots that have already sold or are listed for sale are generally bank-owned and priced about $350,000.

“Given the distressed real estate market in Arizona, it is impressive that the debtors have so many lots in escrow,” Hollowell wrote about the feasibility of the plan. “Impressive, and probably unsustainable.”

Phinny called it a “sad day,” adding, “We tried very hard to hang on to this project … so we could pay everyone back.””

This entry was posted in Oro Valley Real Estate news, Real Estate News, Tucson Real Estate news and tagged , , , , , , , . Bookmark the permalink.

5 Responses to Developers lose luxury Saguaro Ranch

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