Chateaux on Central sold for $7 million

Chateaux on Central sold for $7 million

by Catherine Reagor The Arizona Republic Mar. 24, 2010 12:00 AM

Phoenix's cluster of brick minimansions called Chateaux on Central has a new owner. Wisconsin-based MSI West Investments paid $7 million for the 21 homes with elevators and rooftop terraces.

The high-profile project was started during the housing boom. Then, plans called for the homes, some with turrets and wine cellars, to each sell for $2.8 million and higher. The current deal breaks down to less than $350,000 a home.

Chateaux on Central, at Central Avenue and Palm Lane, has been tied up in Mortgages Ltd.'s financial problems for the past few years. When the original lender, Desert Hills Bank, filed to foreclose in 2007, Mortgages Ltd. took over with a $65 million financing deal. Then, Mortgages Ltd. was forced into bankruptcy by its creditors and investors in June 2008, and Chateaux on Central had been stalled ever since.

Chateaux's new owner intends to unveil its plans for the development soon. Central Phoenix neighbors of the project, including many office tenants on Central Avenue, will be happy to see the homes completed.

"We are very aware that the eyes of the community have been focused on this project for quite some time and that, with the acquisition, comes a tremendous responsibility to provide a top-quality development," said Bill Schmitz, president of MSI West Investments, which paid cash for Chateaux on Central.

MSI West Investments is a division of the food-industry firm Main Street Ingredients of La Crosse, Wis. Joe Morales of Arizona Realty ONE Group has been hired by MSI West to market and sell the homes.

Chateaux on Central is so high profile that it was featured in last year's New York Time's list of "Ruins of the Second Gilded Age."

Mortgage-fraud summit

U.S. Attorney General Eric Holder will be in Phoenix on Thursday for a mortgage-fraud summit. The event is part of the Financial Fraud Enforcement Task Force formed by President Barack Obama last year.

The Phoenix event will be the second summit for the task force. The first was held in Miami in February.

Mortgage fraud began to plague Phoenix's housing market during the boom, when illegal cash-back deals were happening in almost every neighborhood. Now, most fraud schemes in the Valley involve foreclosures.

A diverse group of Arizona market watchers, fraud experts, state and federal regulators and prosecutors as well as real-estate leaders have been invited to Phoenix's mortgage-fraud event.