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Slow land rush: Arkansas real estate brokers tell tales of woe about the RTC.

Slow Land Rush Arkansas Real Estate Brokers Tell Tales Of Woe About The RTC

Arkansas property values won't be depressed much by the government sale of assets accumulated by insolvent thrifts, local experts say.

But anyone trying to obtain information about, broker or buy those assets needs the patience of Job in the face of bureaucratic indecision.

The Resolution Trust Corp., the government agency charged with fixing up the nation's savings and loan mess, recently released current figures showing 273 properties in Arkansas up for sale as a result of S&L failures. (See accompanying charts.) Realtors who have tried to purchase some of these properties tell story after story of their difficulties of dealing with the RTC bureaucracy, one of the nation's largest.

Consider the case of David Elrod, a Little Rock real estate broker. Elrod has sent the agency eight offers totalling $25 million. Some were submitted as early as February. He has yet to hear anything.

Other brokers won't comment publicly for fear of jeopardizing their relationship with the RTC, but privately they tell about delays that have cost them and the government plenty of money already.

Tough To Get Answers

Of the RTC's holdings in Arkansas, single-family homes number 158 or about 58 percent of the total. The greatest concentration is in Little Rock with 36 houses. Apartments, hotels and shopping malls are scattered throughout the state.

Elrod says the RTC's real estate share of the market isn't significant in central Arkansas. By comparison, more residential property could be dumped on the local market from possible Veterans Administration foreclosures, entirely unrelated to RTC actions, he says. But realtors fear the RTC's power to unload assets, despite its lack of clout in the state.

His major concern and that of other real estate brokers is getting answers from federal regulators.

Here are some specific examples of RTC delays:

* The owner of a shopping center financed by an insolvent Little Rock thrift is current with his mortgage payments and is trying to attract a new national retail tenant.

The prospective tenant wants the RTC to approve a quiet enjoyment clause, allowing the tenant to maintain use of the property, even if a new lender comes in and changes the terms of the shopping center developer's loan. The developer has been waiting for more than a month for a reply.

* The Federal Deposit Insurance Corp. closed bids in January on the sale of the LaFayette Building at Little Rock. A high bidder was selected, and he immediately tried to sell the property to another party. But he could not obtain financing, and the FDIC cancelled his bid.

The FDIC is now seeking two appraisals in preparation to remarket the property.

* The RTC generally plays by the book rather than using common sense, one insider says. For example, a loan on a property may have been made for $10 million. But it may be currently appraised for only $6 million. The RTC would hold out for $10 million and reject an offer by the borrower to pay $7 million, even though it is more than the property is worth.

They're All The Same

"They [federal regulatory agencies] all are pretty much the same," says Ann Riesenberg of Rector Phillips Morse at Little Rock. "It is quite an ordeal to get an answer from them. It takes a while to get anything accomplished when you're dealing with the FDIC, the FSLIC [predecessor to the RTC] or the RTC."

A primary source of the problem is the essence of bureaucracy and that of the real estate business clash so dramatically. "The nature of real estate is that you've got to make a decision," says William F. Rector Jr., a Little Rock businessman.

"A bureaucrat has nothing at risk, so he is better off not making a decision," he says. "Nothing is happening with all those properties in the hands of the government."

Rector says one solution may be to auction off RTC property to get it back into the private sector where market forces can dictate prices and movement, which is avoided while it is under the control of the RTC.

Brokers generally praise the efforts of asset managers at each of the Arkansas thrifts in conservatorship. But even if the asset managers make a quick decision, it takes longer when it gets to the RTC.

"We came to work today and we were talking about another week of waiting for the RTC," one Little Rock broker comments.

"We should have gotten jobs as landscapers with a cellular phone," says another broker. "At least then, We'd get a tan and a paycheck to take home to our families," instead of waiting around all day for a decision from the RTC.

Defending The RTC

Charles P. Farrell Jr. at Kansas City, supervisor of the managing agents at failed Arkansas thrifts, says he does not see any major problems.

The federal government has been following similar procedures for years when it closed banks and disposed of their assets.

"Anybody with a problem ought to follow up on it because things usually run pretty smoothly," he says.

It may take more time to review an offer because appraisals have not been done, but they usually can be produced within 30 days, he says.

From the view of Grady Wahlquist, a VP and real estate manager at Savers Savings Association, processing by the RTC has improved from what it was last August.

But after his office makes a decision on a property, he says it takes three weeks at most to obtain an RTC reply.

Desten Broach, a legislative aide to U.S. Sen. David Pryor, says the RTC may now be taking its time making decisions because of criticism leveled at previous officials for making quick decisions that proved to be controversial.

"But there is some validity to them," Broach says. "You just don't hear the variety of complaints in a variety of situations without there being something."

He says Pryor's office will continue to review the matter and prod the RTC to do a better job.

Table : A STATE THUMBNAIL OF RTC PROPERTIES

Type Number

RESIDENTIAL
Single-Family 158
Apartments 12
Duplex, Triplex, Quad 10
Condominiums 40
Mobile Homes 1
Lots 1


COMMERCIAL
Retail 5
Hotel/Motel 3
Special 19
Recreational 1
INDUSTRIAL 1
AGRICULTUR. 2
UNIMP. LAND 20
TOTAL PROP. 273


Table : GEOGRAPHIC DISTRIBUTION (Significant Properties)

Single-Family Homes
Little Rock 36
Pine Bluff 11
Hensley 9
Hot Springs 9
Texarkana 8
Mtn. Home 7
Malvern 5
Camden 5
N. Little Rock 3


Condominiums
Little Rock 26
Jonesboro 8


Retail Properties Little Rock - Outlet Mall Dogpatch - strip mall Searcy - strip mall Texarkana - strip mall Jonesboro - neighborhood mall

Apartments

Desoto, Wooded Creek (196 units) N.L.R., Country Club (125 units) L.R., Wentwood Valley (60 units) Fort Smith, Heritage Lane (49) Rogers, Newland Apts. (20)

Hotels

L.R., Governors Inn Conway, Holiday Inn Jacksonville, Holiday Inn

Source: Resolution Trust Corp. Properties listed as of March 31.
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Article Details
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Title Annotation:U.S. Resolution Trust Corp.
Author:Kern, David F.
Publication:Arkansas Business
Date:Jul 2, 1990
Words:1161
Previous Article:Miracle, or debacle? Arkansas Federal Savings Bank, the little thrift that thinks it can.
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