Posted 3/11/2013 12:00 am
Updated 3 months ago
A private investment firm from Colorado remained low profile even as it made high-profile real estate acquisitions in Arkansas at year-end.
The Broe Group of Denver dipped its considerable toe in the state when Metropolitan National Bank of Little Rock sold assets to raise cash and tidy its balance sheet.
Among the assets Broe acquired from Metropolitan are Fayetteville’s Legacy Building, a nearly $4.3 million transaction, and 223 undeveloped acres and 17 lots in Maumelle’s Riverview residential development, a $3.7 million transaction.
Broe affiliates also bought three loans secured by separate projects: the 20-story River Market Tower in downtown Little Rock, the 125-unit Holcombe Heights Apartments in the Riverdale area of Little Rock and the 20-acre Riverbend town home project in North Little Rock.
The outstanding balance of the three loans and prices paid weren’t disclosed.
The last recorded loan balances on the public record were $47.6 million in 2007 for the River Market Tower, $5.1 million in 2007 for Holcombe Heights and $1.8 million in January 2012 for Riverbend.
Susie Smith, senior executive vice president and chief operating officer for Metropolitan National Bank, declined to discuss specifics of the asset sale.
“We’ve never disclosed the details of those transactions and the components of it,” she said.
The December asset sale allowed Metropolitan to post its only profitable quarter during 2012. The $1 billion-asset bank recorded net in-come of $761,000 during the fourth quarter.
On Jan. 9, The Broe Group announced a cash purchase of an $80 million portfolio of non-performing loans and real estate from an unnamed “billion-dollar regional bank” for an undisclosed sum.
Asked whether the non-performing assets referenced in the announcement, which included high-rise condominiums, commercial and residential developments and multifamily properties, came from Metropolitan National Bank, the bank’s CEO, Lunsford Bridges replied, “I really don’t know what they were talking about.”
A requested interview with Broe executives failed to materialize. Patrick Broe, the 65ish corporate namesake who founded the company in 1972, and Bob Jacobs, chief investment officer, couldn’t be reached for comment.
“We have a strong interest in continuing to make significant moves in this space, as we have more than $1 billion of capacity to continue buying portfolios of distressed real estate,” Broe said in a press release when the $80 million portfolio purchase was announced.
Broe Real Estate Group, an affiliate of The Broe Group, touts itself as providing property management, asset management and advisory services for more than 29 million SF of commercial real estate owned by affiliates and third parties throughout North America.
Of these assets, according to the company, Broe Real Estate Group has owned or managed more than 10 million SF of commercial property, 5,100 multi-housing units, 300,000 acres of land and nearly $500 million in non-performing loans.
The Broe Group employs more than 2,000 and also owns Great Western Oil & Gas Co., the Great Western Industrial Park in Windsor, Colo., and OmniTrax Inc., which operates one of the largest privately held short-line railroad systems in North America.
With 310,000 acres, Broe ranked No. 23 in the 2012 America’s Top Landowners List published by The Land Report. His Hubble and Green ranches in New Mexico cover 290,000 acres, according to the magazine.
• Broe’s Legacy deal encompasses 31 condominiums and some commercial space on the ground floor of the six-story project that overlooks Fayetteville’s famed Dickson Street to the south.
Metropolitan held a 47.3 percent stake in Brandon Barber’s failed Legacy Building, with the remainder divided among First National Bank of Fort Smith, 35.3 percent, and First National Bank of Green Forest, 17.4 percent.
Broe bought out the lenders, who had owned the 401 W. Watson St. development since November 2008 after recovering it at an $11.2 million foreclosure sale.
• Broe’s Maumelle residential land was recovered by Metropolitan at a $3.5 million foreclosure sale in February 2010.
The former owner of the Riverview property was Capitol Development of Arkansas Inc., led by Howard, Diane and Ashley Bloom of Boca Raton, Fla. Capitol Development owed Metropolitan more than $4.9 million on two loans secured by the Maumelle land.
• The 2007 construction loan on the River Market Tower was modified and extended in 2010 and 2011 by Metropolitan before Broe bought the debt in December 2012.
According to real estate records, 54 of the 133 units have sold. Jimmy Moses and Rett Tucker are the movers behind the 1.2-acre development at 315 River Market Ave.
Moses said he doesn’t know much about their new lender.
“We haven’t been dealing with them long, but they seem like reasonable folks,” he said. “We had a chance to meet several of their executives. They like Little Rock and think it has a bright future. They’ve been here a lot looking during the past year.”
• The Holcombe Heights mortgage was modified and extended twice in 2008 and once in 2010 and 2011 by Metropolitan before Broe purchased it.
The 6-acre development is owned by McFadden One LLC, led by Bess McFadden Sanders. Other members of the ownership group are Todd and Chris Bridges, sons of Metropolitan CEO Lunsford Bridges.
The apartment project was acquired for $6.4 million in June 2007 with an eye toward condo conversion. But that idea was shelved and the project remained as multifamily.
“We decided it just wasn’t a good time to take that amount of risk,” Todd Bridges, a member of the limited liability company, said in a September 2008 interview with Arkansas Business. “I don’t see the economy coming back until 2010. We didn’t want to get out there with a condo project right now.”
Holcombe Heights was purchased from an investment group that included Paul Tibbs, James Tibbs, Andrew Tibbs, Jimmy Moses, Rett Tucker, Denise Martin and Chris Moses. They purchased the property for $5.5 million in January 2006.
• The Riverbend town home project in North Little Rock was sold at auction by Metropolitan National Bank for $1.8 million.
The bank financed 100 percent of the sale with a loan to B&L Osborne Investments LLC, led by Bob Osborne. Metropolitan recovered the property from Riverview Luxury Townhomes and Crystal Condominiums Inc., both led by Eutaw Horton and Osborne.
Bob Jacobs, chief investment officer for The Broe Group, talked about the investment opportunities afforded by the real estate crash at the National Association of Real Estate Editors Conference in Denver last year.
“There are a lot of former developers and real estate owners who are now much less wealthy than they used to be and have been dragged through the dirt,” Jacobs said. “There are a lot of guys who have experienced the crash, and I think there is a lot more to come.”
He said some banks had been slow to recognize their losses because they don’t have the capital needed to absorb the losses.
“There are a lot of hidden assets underneath the table …,” Jacobs said. “It may not be as high-profile and political as the single-family [residential] bust has been, but it’s still there.”