PHOENIX, Jan. 29, 2019 /PRNewswire/ -- Crown Realty & Development, a renowned California-developer behind significant projects in Arizona, through controlled affiliates, has closed on 96.5 acres and acquired the "Master Developer" rights in North Phoenix's Desert Ridge master planned community. The property and rights have been the subject of active litigation and bankruptcy for a decade. Crown now plans to develop the land as a new urban core in Phoenix.
Crown's winning bid for the land was $54 million while the Bankruptcy Court had previously valued the land as high as $121 million.
The acquired acreage comprises the majority of the vacant land east of the 1.2 million square foot Desert Ridge Market Place and that surrounds the existing High Street. The land Crown has acquired is zoned for about 2500 residential units, 2.0 million square feet of office, 500 hotel rooms and 100,000 square feet of retail.
"Unlocking this parcel from years of litigation now provides the opportunity to develop a 21st century urban community on the north side of Phoenix," said Robert Flaxman, CEO of Crown. "What Century City was to Los Angeles in the 1960s, the new City North project will be to Phoenix," he said.
Flaxman said there is now finality about litigation and certainty about future development on what many consider to be Phoenix Metro's most prized, undeveloped commercial property. As part of bankruptcy court proceedings all claims have been settled. As part of the judgment, Crown obtained what are known as "master developer" rights not only for its 100 acre site but also the entire 5,700 acres at Desert Ridge from the 51 Freeway to 64th Street and on both sides of the heavily trafficked Loop 101. That's approximately five square miles in the City of Phoenix's highest-growth corridor.
City North was planned in the mid-2000s to be a significant retail development that was to include Bloomingdales, Nordstrom's and Macy's. The recession and years of litigation prevented the project from moving beyond the High Street portion that was completed in 2008.
"It's impossible to grow new land but the slumbering status of this property for the last decade or more does exactly that, as the end of litigation means the start of development for what is unquestionably one of the best pieces of real estate in Arizona, and perhaps America," said Rick Carpinelli, Senior Vice President of Acquisition and Development at Crown.
Carpinelli noted that the greater Phoenix market is maturing with corporate headquarters for technology, health care and financial service companies moving to and expanding in the market. The majority of that growth has been centered in Tempe or the Southeast Valley where land and zoning has been plentiful to meet the demand. That all changes with Desert Ridge's City North jumping onto everyone's short list.
Prior to the Great Recession and the more recent legal imbroglio, significant commercial development did occur at Desert Ridge in the late 1990s and early 2000s with Desert Ridge Marketplace, Mayo Clinic, JW Marriott Resort, American Express and thousands of residences.
With Monday's closing by Crown, the City of Phoenix now has the opportunity to better capture pent up demand in the Valley and create a second urban node for the city.
Mayo Clinic has recently announced plans to double the size of its nearby 250-acre campus with a $650 million investment. Arizona State University has broken ground on its first 166,000 square foot building on its adjacent healthcare campus. American Express is also under construction on a new 300,000 square foot building expanding its current employee base of 5,000 to 8,000.
These developments show the demand for growth in this North Phoenix sub-market and were able to proceed because they were properties outside of the litigation that has stymied more growth in Desert Ridge.
This all changes thanks to Crown's successful conclusion of litigation and acquisition.
Crown acquired the 96.5 acres and Master Developer rights in Desert Ridge as a final, non-appealable step in what has been a long series of various litigation matters.
In late 2015 and early 2016 affiliates of Bruce Gray and Gray Development defaulted on notes owned by Crown. One of the notes was secured by the 96.5 acres of land that surrounds the High Street property as well as the Desert Ridge Master Developer rights. In the years that Gray held these rights, not one shred of development occurred. Gray filed bankruptcy in May 2016. The bankruptcy was resolved in March 2018 with a ruling from U.S. Bankruptcy Court that became a final and non-appealable order. The ruling ordered the sale of the Desert Ridge property through a court appointed trustee. Beth Jo Zeitzer of ROI Properties was appointed by the court to be the trustee to oversee the marketing and sale of the property. The bid deadline for the court ordered sale was January 15th, 2019. Crown's credit bid was the winning bid and thus Crown purchased the property and Master Developer Rights, closing on January 28th.
Crown, which has locally developed the Montelucia Resort (now an Omni property) and spearheaded the redevelopment of Mountain Shadows in Paradise Valley, now plans to develop what will essentially be a new city on the coveted property.
"The new City North project will include a residential core, office buildings from four to ten stories, vibrant new restaurants, a full-service hotel and several select service hotels," said Carpinelli.
"All of this is great news for existing residents of the area soon to get more amenities as well as future residents and employers who will be able to call this amazing slice of Arizona home," said Flaxman.
Crown is already working with several major corporate users looking to locate their business at Desert Ridge. Crown will begin developing the property this spring and plans to complete the streets, sidewalks and landscaping by the end of 2019. In addition, Crown anticipates the first office building, the first residential project and the first restaurant all starting construction this year.
For more information, a copy of the bankruptcy ruling or to arrange interviews with Flaxman or Carpinelli please contact Jennifer Parks-Sturgeon at the information above.
Contact: Jason Rose or Jennifer Parks-Sturgeon
Rose+Moser+Allyn Public & Online Relations
Jason Rose Mobile: 602.791.4488
Jennifer Parks-Sturgeon Mobile: 480.495.3806
SOURCE Crown Realty & Development