Mortgage And Real Estate News

Saturday, June 25, 2011

Auction set for Glendale center

Westgate City Center, the flashy dining and shopping complex that anchors Glendale's football stadium and hockey arena, is facing foreclosure.

The Ellman Cos. announced Monday that the property at Loop 101 and Glendale Avenue has been scheduled for auction.

"Despite Herculean efforts, the Westgate ownership group, including a consortium of Wall Street real-estate entities, is not immune from the real-estate collapse," the Phoenix-based Ellman Cos. said in a statement.

The developer blamed the national recession and uncertainty surrounding the future of the Phoenix Coyotes staying in Glendale for the complex's struggles. The Coyotes have been without a permanent owner for two years, hurting the number of visitors to hockey games and to Westgate shops and restaurants.

The situation has several potential outcomes: Developer Steve Ellman could negotiate a deal with lenders to keep the property; new buyers could purchase the complex at auction; or lenders could take over the complex if no buyer is secured.

At least one potential investor has already expressed interest. Matthew Hulsizer, working on a deal to purchase the Coyotes, said Monday that he might be interested.

Westgate has played a major role in Glendale's economic aspirations.

Ellman worked with the city a decade ago to build a sports and entertainment district. The city paid $180 million to build Jobing .com Arena for the Coyotes, a team that Ellman owned at the time. Ellman built Westgate, which the city depends on for sales-tax revenues to make annual $8 million to $10 million debt payments on the arena.

Westgate opened in 2006, behind schedule and behind in the size of the promised development. The complex boasts Bellagio-style fountains, a movie theater, more than a dozen eateries and night spots like Saddle Ranch Chop House.

Glendale Mayor Elaine Scruggs said Ellman assured her Westgate would stay open and visitors would notice no changes.

"We're disappointed to hear the news," she said, but "it really isn't surprising. Steve Ellman has poured tens of millions of dollars into the project. But just like all other properties, his valuation has dropped so low in comparison to what is owed on the property."

Glendale issued a statement that Westgate businesses "will be open as usual."

Eric Bennett, Saddle Ranch's acting general manager, echoed that, saying that "who we write our check to is a moot point."

He said Westgate and Saddle Ranch would continue to be a destination for Valley residents.

The complex is owned by subsidiaries of Ellman Cos., Entertainment Center Development LLC and Coyote Center Development LLC. Records of the trustee sale were not immediately available from the Maricopa County Recorder's Office. Ellman Cos. spokesman Jason Rose said the auction should take place in 90 days or more.

Rose said the developer was current with all payments on interest, vendors, services and staff salaries, but that a lead lender found the developer and other lenders in default for missing payment on the balance of the loan when it recently came due.

Hulsizer, who has been working with the city for a year on an arena lease agreement for the Coyotes, said the foreclosure process will not deter him from trying to purchase the team. Hulsizer said he even would be interested in buying or partnering in the purchase of Westgate.

"We're investors, and we believe in Arizona long-term," he said. "There might be some interest in purchasing Westgate if it came for sale."

by Rebekah L. Sanders The Arizona Republic Jun. 21, 2011 12:00 AM

Auction set for Glendale center

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