Another week -- another failure to close the sale of the high-rise Centerpoint Towers in Tempe.
As of this evening, the sale to the Ohio-based Zaremba Group still isn't closed -- and it's looking less likely.
The sticking point is about $21 million still owed to subcontractors who worked on the towers from 2005 until the funding dried up in 2008. New Times detailed the hubris and financial over-reaching that spawned the unfinished towers in a feature article last year.
It turns out we weren't the only ones wondering how ML Manager, the successor company to Mortgages Ltd. whose investors own the towers, could sell the two towers to Zaremba for $30 million yet still owe a bunch of sub-contractors $21 million.
"We were watching the press conference like other people ... and going 'What the hell?'" says Chad Schexnayder, an attorney for six different subcontractors with claims on the property. "Nobody had consulted us about what needed to be done."
The collapse of Mortgages Ltd. and subsequent foreclosing of the Centerpoint Towers, which had been Mortgages Ltd.'s single biggest project, became a work program for dozens of lawyers. The issues and overlapping claims are incredibly complex. Schexnayder is just one of several lawyers representing as many as 15 subcontractor companies who are owed the $21 million.
Essentially, the group of companies and their separate lawyers are waiting for a good offer. They know the offer will be far less than $21 million, but it can't be too much of a discount. The lienholders are "exceedingly flexible," Schexnayder says.
But if they can't be satisfied, there's no sale. In theory, the subcontractors still might end up with the property itself. As a group, no one seems to be pushing hard for the Zaremba sale -- nor is anyone trying to fight it. They're simply waiting to see what the seller and buyer -- ML Manager and Zaremba -- come up with.
"Herculean efforts" are being made behind-the-scenes by the seller's representatives to try to make the deal go through, Schexnayder says. Still, he says he's "less optimistic" about the Zaremba sale than he was when it was announced.
A local representative of Zaremba, meanwhile, is trying to stay positive.
"We have every intention of closing this deal," says Kent Chantung, director of development in the company's Scottsdale office.
Zaremba, funded in party by the California Teachers' Pension Fund, intends to pump millions into the project, finish both towers and offer its 375 units for rent by the end of next year.
If it gets the chance, that is.