The snazziest apartment complex in the Valley, Grigio Tempe Town Lake, has filed for bankruptcy and is seeking an emergency court ruling that will keep residents' services online.
An attorney working for Grigio's developer, Susan Freeman of Lewis and Roca, says she's confident the bankruptcy judge will approve continued payments for the many services provided to renters at the complex. That's good, since court records state that pulling the plug on the ritzy amenities such as high-speed cable and Internet access could lead to an exodus of the place.
Gray Development Group of Phoenix, owned by Bruce Gray, is the parent company for Grigio TTL and Mondrian TTL, which filed the bankruptcy paperwork today. New Times left a message for Brian Kearney, chief operating officer for Gray Development, but we haven't yet heard back.
Records show the Grigio complex on the Town Lake's north shore owes about $63 million to KeyBank, $10 million to the city of Tempe, and $6.8 million to an investment group.
Grigio is the "Rolls Royce of Valley apartment communities," according to one real estate expert quoted in the Arizona Republic three years ago, just after people began moving into the complex. Some units went for $5,000 a month back then.
The complex's "brand manager" told the Republic that if renters...:
... want their dry cleaning waiting for them in their closet, we'll ask which side of the closet. If they want their hair done, a massage, coffee delivered to their door, it will all be here.
Grigio failed to find permanent financing to replace KeyBank, the initial lender, which had expected to be paid back by last year, the bankruptcy filing states. KeyBank and Grigio have been operating under a special agreement for the last year in which the apartment owners sought a new investor.
Grigio's backers at Gray Development believe the complex is worth at least $70 million. The company may have found a new investor who would pay off the loan, records state.
Yet on May 5, KeyBank sold the loan to another Valley developer, the Picerne Group. That company appears poised to foreclose on the debt and acquire the property before Gray Development can shore up its finances.
The complex is almost 90 percent full, and Gray hopes to keep using income from renters to pay the bills until everything is sorted out.
Gray Development just e-mailed (12:30 p.m.) the following statement on the situation:
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STATEMENT BY GRAY DEVELOPMENT COMPANY CONCERNING GRIGIO MULTI-FAMILY PROJECT IN TEMPE
MAY 10. 2010. PHOENIX , ARIZONA . The owner of Grigio Tempe Town Lake Apartments, Mondrian TTL, L.L.C. ("Mondrian"), has filed for Chapter 11 voluntary reorganization protection. Mondrian is an affiliate of Gray Development Company.
The issues that led to this filing relate solely to differences that the owner has with its lenders, and nothing to do with Grigio's operations. Mondrian believes that the bankruptcy filing is the best strategy to resolve the issues with its lenders, and already has an agreement with a new equity partner to facilitate a plan that will allow us to exit from the bankruptcy process within a very short period of time.
Most importantly, Mondrian's filing will have absolutely no effect on the daily operations at Grigio, residents or on any other property operated by Gray Residential, L.L.C. Mondrian is a single-asset entity and its status does not impact other Gray-affiliated entities. Gray Residential's management team will remain in place at Grigio and all other properties. The company remains 100% committed to providing our residents with a superb living experience.