Arizona Land Sells at a 92% Discount

In an eye-opening example of how far land prices have fallen in the Arizona area since the market peak, a 10,200-acre tract of land near Maricopa recently sold for roughly eight cents on the dollar. The land, in the city of Goodyear, southwest of Phoenix, was bought in 2006 by a group of investors, including the California Public Employees Retirement System (CalPERS), for $400 million. It sold at the end of May for $32.5 million. “It [the 2006 purchase] couldn’t have been timed any worse. No one knew the market could turn off overnight,” said James Pickett of The Benjamin Group, whose business partner, Bill Olsen, represented the sellers in the 2006 transaction and the buyers in the most recent one. The joint venture put down $150 million on the land and took out two loans totaling $250 million to finance the purchase and development. Under its ownership, the CalPERS group had the land, named Amaranth, annexed into Goodyear and entitled for 42,000 homes, 1,600 acres of commercial development, and 700 acres of industrial development before defaulting on the two loans, sending the land into foreclosure. After the foreclosure in 2009, the parcel ended up in the hands of The Archon Group, a subsidiary of Goldman Sachs & Co., one of the lenders. Nate Nathan, president of Nathan and Associates in Scottsdale, Ariz., marketed the property to buyers who might be interested in it as a solar power generating farm or for its water rights, said Nathan. There was no thought that there would be any home developer or builder interested in more than 10,000 acres of raw land in that area anymore, despite the “incredible” entitlements that the land bears, he said. The current purchasers, a holding company for ARCUS Private Capital Solutions in Gilbert, Ariz., and a company backed by a Houston-based funeral and cemetery company, don’t plan on putting homes on the land any time soon, reported Business Real Estate Weekly of Arizona. However, the new owners say they will continue with the entitlement process and are planning for future development.

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