June 2, 2011 at 8:13 am #56242
What does this mean for Spain? I bet you there are projects in Spain with a lot in common (now sitting on bank balance sheets at more or less face value). Should they be discounted and sold like this Arizona project?
Arizona Land Sells for 8% of Price Calpers Group Paid at Peak
A 10,200-acre (4,100-hectare) desert site in Arizona sold for $32.5 million this week, five years after a group with investors including the California Public Employees’ Retirement System paid $400 million for the land.
Arcus Property Solutions LLC, a private-equity fund with about $100 million under management, paid cash for the property in Goodyear, about 60 miles (97 kilometers) southwest of Phoenix, said Kent Kleinman, a spokesman for the Gilbert, Arizona-based company. The site, now called Amaranth Land LLC, had been planned for a 42,000-home community by the Calpers- financed group when it was purchased in 2006.
The deal shows how property investors are taking advantage of a plunge in values after the real estate bubble burst in Arizona. A group of lenders, led by Goldman Sachs Group Inc. (GS), seized control of the Amaranth site in 2009 after the bust halted development, said Jeff Garrett, owner of Garrett Development Corp., the land’s manager after the foreclosure.
“Five, six years ago, people were spending $200 million or $300 million or $400 million,” Garrett said in a telephone interview. “This just sold for about eight cents on the dollar.”
The 2006 buyers were a joint venture of MW Housing Partners III LP, a real estate fund with money from Calpers and Weyerhaeuser Co. (WY); and Scottsdale, Arizona-based Montage Land LLC, according to Arizona Corporation Commission records. The deal was funded by a $250.1 million loan and $150 million in cash, according to Terry McDonnell, publisher of Business Real Estate Weekly of Arizona in Scottsdale.
June 5, 2011 at 4:44 pm #104788
Land projects like these work more like derivates in the housing markets and therfor the ups and downs are much larger. Quite impressive slash of the price though.
Yes the banks need to lower prices on their repossesions otherwise this state that the market is in will never end and it will cause horrendous effects on Spain in the long term. Had the market worked as it should banks would have gone belly up some years ago and the stock would have been gone. Now it just hurts the average joe even more by having them paying for it. A long stand still in the market is never good for anyone.
December 20, 2013 at 9:37 am #118863angieBlocked
What’s the point of advertising Arizona property here, Brits can’t live there permanently? 😆
December 20, 2013 at 12:39 pm #118864
It’s spam Angie. 👿 I’ll deal with it.
December 20, 2013 at 1:46 pm #118865GarySFBCNParticipant
Some context may help:
CalPers is big – probably worth more than $300 billion in 2006. For several years before the 2008 crash, they were so good with their investment returns that the stopped collecting pension dues from working people. And in those days they were highly speculative with a very narrow percent of their funds.
Arizona did show some promise, especially for retirees because, unlike California, there is no State income tax. And in 2006, with real estate prices climbing in so many parts of the country, many expert analysts predicted that Arizona would be a hot market. So it was somewhat speculative and somewhat reasonable to buy back then, and it was ‘big money’ the moved the price of this land to a ridiculous level.
CalPers wants this off their books – it will be a ‘write-off’, reducing their dead investments line on their annual report, hence the fire sale pricing.
I don’t think this will ever happen in Spain, where people still believe that their properties are worth what they were in 2006-7.
And as we have seen over and over, if someone connected to a politician wants to off-load property, all the politician has to do is pressure a bank to purchase it for an over-valued amount, and then wait for taxpayers (Spanish or German) to bail out the bank when the investments are discovered to be bad.
December 20, 2013 at 4:14 pm #118867katyBlocked
If Spanish banks wrote down their property portfolios to what they are really worth they would need another bailout!
December 22, 2013 at 12:02 pm #118885loganParticipant
The banks in Spain will have to face massive write downs in the coming years. The SAREB will force it on them as the Bank of Spain refuses to maintain the rising overheads of the properties they now own. Losses especially on land and golf courses that need constant investment will see to that. Also they become legally liable to pay community charges and local taxes.
The bad bank cannot just sit on massive property portfolios indefinitely.
January 28, 2014 at 3:56 pm #119048
I know the area very well, it is located in the desert, no one wants it. Don’t be fooled it is no man’s land, imagine buying land in the Sahara.
I live in Scottsdale and only housing is barely picking up but just slightly. It was a nightmare for more than 5 years. Arizona and Florida are the worse in the country, followed by Nevada.
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