DMB entity defaults on DC Ranch marketplace

Bank of America has asked that a receiver be appointed for the posh Market Street at DC Ranch retail development in north Scottsdale.

The center's owner DMB Market Street LLC, an affiliate of high-profile real-estate developer DMB Associates Inc., is in default on a $47.5 million loan secured by the 300,000-square-foot center.

BofA and ING Clarion Capital Loan Services LLC are not the lenders but represent holders of mortgage-backed securities into which the original 2005 loan from Archon Financial LP was carved up.

BofA and ING Clarion note in court filings that DMB stopped making payments on the loan in October and was notified in January that it was in default.

Charley Freericks, senior vice president and general manager of DMB Associates' commercial real-estate arm, DMB Commercial, said the group has been trying to negotiate more favorable terms with the lender and is optimistic it still may be able to do so.

"There is no foreclosure pending, and we are optimistic that the negotiations are moving in an affirmative direction," he said in a statement.

Real-estate experts predict a wave of shopping-center foreclosures in the future as lenders who have been working with delinquent borrowers bite the bullet and foreclose. The centers have been hurt by rising vacancies, falling rental rates and declining real-estate values. Many have mortgages that are considerably more than the centers are now worth.

"Like other major commercial-property owners in the Phoenix metro area, DMB is not immune from the impacts of these economic conditions," Freericks said.

BofA and ING Clarion contend they are entitled to the rents and income generated by the property and are seeking a receiver to protect their interests. A receiver is typically brought in to manage property that has been pledged as collateral for a loan that is in default.

Tenants generally notice little change under a receiver and can see an improvement if the property had been neglected by a cash-strapped owner.

There are more than 30 businesses in Market Street at DC Ranch that range from Safeway and L'Hermitage Couture Jewelers to Fleming's Prime Steakhouse & Wine Bar and Grimaldi's Pizzeria. The center is said to be about 70 percent occupied but is scheduled to lose one of its main restaurant tenants. Eddie V's Prime Seafood is relocating to the Scottsdale Quarter retail center near Kierland.

Freericks said DMB is committed to holding onto Market Street and maintaining it as "north Scottsdale's retail and entertainment destination of choice."

A receiver was scheduled to be appointed July 30 by Judge Sam Myers of Maricopa County Superior Court, but DMB Market Street blocked the move and had the case moved to the U.S. District Court of Arizona.

DMB's attorney, Brian Schulman, declined to name the reasons for the shift and said only that it was permissible because the parties are based in different states. Schulman said a federal court date has not yet been set to consider the request for a receiver. The lenders' attorneys did not return calls seeking comment.

The 37-acre Market Street development is a "Main Street-style" commercial district that was developed from 1999 to 2003 within DMB Associates' 3,700-acre DC Ranch community in Scottsdale.

DMB's commercial arm also operates Centerpoint on Mill in Tempe, DC Ranch Crossing in Scottsdale and the Offices on Main Street at Verrado in Buckeye.

DMB Associates Inc. was founded in 1984.

by Max Jarman The Arizona Republic August 5, 2010 12:00 AM



DMB entity defaults on DC Ranch marketplace