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1991 Was Highlighted By Millions Of Dollars In Foreclosures, Bankruptcies, Bargains And More

Even casual observers couldn't help noticing the number of church-related projects to come through the development pipeline during 1991.

Congregations around the state were keeping architects, engineers, and contractors busy with remodeling work, building additions and constructing new facilities.

A definitive dollar total is hard to peg. But the figure easily runs into the tens of millions of dollars.

What makes the activity more interesting is the wide diversity of denominational backgrounds that took part in this ecumenical trend.

The Lord moves in strange and mysterious ways. And, on a secular plane, the same could be said of the Resolution Trust Corp., the Federal Deposit Insurance Corp. and others.

Some real estate deals involving the feds caused folks to stop and scratch their heads while pondering what it all meant.

What was Ed Riffel, president of the now-defunct First Republic Mortgage Corp., really doing when he filed multiple first mortgages on property in Pulaski County?

The resulting claims have run up a seven-digit bill for Title Insurance Co. of Minnesota and left a taint of fraud that the FBI is investigating.

And how come Jeffrey Pence, TIC's Little Rock lawyer, didn't catch any of the screwy transactions his client paid him to review?

The disintegration of the commercial real estate firm of Basham & Co. began with a bang and is finishing with a whimper.

The expected courtroom fireworks between partners John Grillo and Charlie Basham never happened. Grillo's angry charges of fraud against Basham quietly went away.

Basham signed a secret settlement and signed over his interest in several million dollars worth of retail projects to Grillo, who withdrew his lawsuit.

Less controversial but equally eye-catching were a pair of major retail projects to arrive on the scene.

McCain Plaza, a $20 million development, opened this year in North Little Rock. Folmar & Associates of Montgomery, Ala., is responsible for this 270,500-SF project.

And the ground breaking was held for Valley Park Centre in Russellville, a 285,000-SF project that will weigh in at $15 million.

The $2.25 million land acquisition is touted as the biggest real estate buy in Pope County.

A Bargain

What was the biggest bargain of the year?

The state of Arkansas negotiated a deal to buy 76.4 percent (100,261 SF) of the Freeway Medical Tower in Little Rock for $3.4 million.

Not a bad price considering Sidney Weniger spent about $14 million to develop the entire office condominium project, which opened in 1984.

The purchase represents about 32 cents on the dollar. Once the finish-out work is complete, the University of Arkansas for Medical Sciences and the state Health Department will occupy the space.

A close runner-up, and perhaps an even more high-profile transaction, is the Union Train Station in Little Rock.

John Bailey and his wife, Patricia, paid $540,000 for the historic 11,000-SF building and 5.6-acre property.

The train station had been mired in multiple lawsuits, foreclosures and bankruptcies since 1975.

One of the more recent efforts pumped a $4.56 million bond issue into the project in an effort to spruce it up and make the development a profitable concern.

The Baileys intend to redevelop a portion of the building into a children's museum. It's an unusual move, to be sure, and has some people scratching their heads.

In any event, John Bailey certainly made a big splash in returning home to Little Rock after working as a floor trader at the Chicago Mercantile Exchange.

He is the son of Dr. H.A.T. Bailey and his wife, Virginia, of Bailey Corp. fame.

A record-breaking bankruptcy case ended on a happy note for The Crestwood Co. of North Little Rock.

The company emerged from bankruptcy court in November, battered but intact after its reorganization plan was approved. Crestwood filed the Chapter 11 petition 14 months earlier.

More than a third of the company's $73 million of debt will be erased after property and projects are turned over to lenders.

Creditors have agreed to restructure the payment schedule on a chunk of the remaining debt. The new arrangement will give Crestwood a two-year grace period before loan payments resume.

The final hurdle was Leader Federal Bank of Memphis, Tenn., agreeing to take the Holiday Inn-City Centre -- a 280-room hotel in downtown Little Rock.

The bulk of the debt write-off will be the Lakewood Village Shopping Center in North Little Rock. Boatmen's National Bank of St. Louis will be receiving the 172,230-SF development in lieu of payment.

Some real estate wags have already labeled the workout a successful cram down for Crestwood.

Special Improvements Gone Bad

Was there a foreclosure action in 1991 with bigger implications than the $10.2 million lawsuit filed in April against DeHaven, Todd & Co.?

Jay DeHaven and Michael Todd stand to lose their interest in the 3,250-acre spread purchased in 1988 for $11 million from Worthen National Bank of Arkansas in Little Rock.

Question marks still surround what impact the foreclosure will have on the hundreds of homeowners and landowners in Maumelle.

The Resolution Trust Corp. initiated the litigation on behalf of Texas-based San Jacinto Mortgage and San Jacinto Savings Association.

A San Jac subsidiary, Southmark Mortgage Corp. of America, funded the Maumelle acquisition. DeHaven, Todd & Co. defaulted on two loans and countersued for breach of contract after the RTC foreclosed.

Another foreclosure suit against DeHaven, Todd & Co. hit the courts in November on $20 million worth of bonds.

More than $419,565 worth of improvement district taxes went unpaid on lots in the West Pointe, Diamond Pointe, Edgewater, Waterside, Town Center and Maumelle Heights subdivisions.

Darbe Development Co. has found itself in a similar situation when it defaulted on a $6.72 million bond issue.

The money was used to fund improvements in three residential subdivisions in west Little Rock -- Bell Pointe, Carriage Creek and Pleasant Heights.

The 166-acre Carriage Creek venture was originally led by Melvyn Bell. But control of Darbe Development shifted to his ex-wife Darlene following their divorce this year.

A foreclosure auction was prompted after $1.6 million in unpaid property assessments and penalties accumulated against Darbe Development.

The event featured more than 200 lots for sale, but drew only one taker. L.K. Moore Jr., a home owner in Carriage Creek, bought two adjoining lots and a corner lot down the street from his house.

Some wonder if the coming foreclosure auction on the Maumelle lots will produce a similar showing.

The bargain hunters are playing a waiting game and hope to deal with the various bondholders directly.
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Title Annotation:The Year in Review: Real Estate; foreclosures, bankruptcies and bargains in the real estate industry
Author:Waldon, George
Publication:Arkansas Business
Article Type:Industry Overview
Date:Dec 30, 1991
Words:1106
Previous Article:Stunted growth: growth of Arkansas' small businesses falls 54.2 percent due to economic recession.
Next Article:Backlash: Democrat-Gazette rates increase by up to 300 percent as Arkansas advertisers consider the alternatives.
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