Westgate City Center

June 23, 2011

Transcript:

Ted Simons: Good evening, and welcome to "Horizon." I'm Ted Simons.
Ted Simons: Westgate city center is facing foreclosure. On Monday, the Ellman Company announced the Glendale shopping complex near the Cardinals football stadium and the coyotes hockey arena has been scheduled for auction. Here with more on the story is Mike Sunnucks of the Phoenix Business Journal. Is this foreclosure, is this a surprise?

Mike Sunnucks: A little bit, but not a total surprise. There's been a lot of projects in the valley on the west side, other places that have faced this. It's basically a warning, they'll probably set a date for an auction, and if the Ellman companies entities that own the land and property can't work something out, you'll have a foreclosure auction, similar to what you see with homes. The economy really challenged things out there. Obviously the Coyotes situation comes to play, about the growth didn't really happen the way they had hoped.

Ted Simons: Give us a history, become ground of Westgate. What was -- what it was designed to do, what it started to do and how it's developed, or lack thereof.

Mike Sunnucks: It was built as the entertainment retail anchor of the west valley, next to the arena and the Cardinals stadium. There's movie theaters there, some of the restaurants have done OK. But they had hoped for more growth right around there. People, it didn't happen because of the collapse, so the foot traffic never quite came to fruition. And they might have hoped to get big box stores. Think Tempe marketplace, desert ridge where you have the restaurants and bars, but you also have best buy, target. That draws people in when there's not an event. When there's games or concerts, it's fine. The challenge is when there's no events during the day, it doesn't have the traffic you see maybe at some of the other places.

Ted Simons: Did the performance record change over time? Is it worse now than it had been? Even the downturn in the economy, last year or two, things get worse?

Mike Sunnucks: They've been trying to find some other uses. DeVry University has located a campus there for some of their classes. There's restaurants that have done OK, and the movie theaters have done OK, but there's never been a big retail component that glommed on to that. They had competition from other developments around there, obviously the economy impacted this. You can't ignore that. And stuff up on bell road, the arrowhead area, where there's a lot of types of stores already. So it got squeezed in a lot of different sides.

Ted Simons: Who owns this property? These are two separate Ellman companies?

Mike Sunnucks: Yes. Steve Ellman moved the coyotes out there, swapped interest in the coyotes with Jerry Moyes. And he has some different types of companies, he owns a billboard company, which is doing pretty well, and he owns these things. And so these are all Ellman entities that are involved in this.

Ted Simons: Are these other entities insulated from this particular move?

Mike Sunnucks: Yeah, they're LLCs. The Bidwell family had a parcel near the stadium, they were going to build a skyscraper, office tower, not too far from Westgate. The economy tanked, they got foreclosed on, it's totally separate from their other entities.

Ted Simons: Let's talk about the Coyotes situation. You mentioned that earlier as being a factor. How much of a factor is that, and if tomorrow we found out that there was a sale of the coyotes, does that make that much of a difference on a Westgate shopping center?

Mike Sunnucks: A the bit. I think it hurt a little bit. The success of the team the past few years helped attendance, but attendance was down. It doesn't help, but you still see folks in there when there's a game. Especially when they're playing one of the Canadian teams, a team with a lot of fans, the red wings. Those people go out to eat. So the coyotes situation, the uncertainty, the low attendance overall doesn't help things out there.

Ted Simons: Talk about future impact of what could be going out there. What's planned for going out there, and now does that get hurt by this announcement?

Mike Sunnucks: Yeah. These things can't help things. It creates uncertainty. If you're a business looking to locate, you may think twice. Ellman was talking to Tangor outlet malls about locating a 400,000-square-foot mall on some land at Westgate. They can still land there. That would be a big win because you'd have people drawn in there for something besides games or concerts. That's been the key. They haven't been able to make it a magnet other than Sundays or when there's a concert.

Ted Simons: Talk more about that. The idea that Glendale had for this to be a magnet, to be retail, some sort of entertainment and sporting hub. This has to hurt that. It seems like they're taking hit after hit out there.

Mike Sunnucks: Yeah. You had the main street Glendale project that was a similar type of projects, offices, golf courses, resorts. Never happened. The Bidwell thing never happened. They're fighting the casino; obviously they've been involved in the coyotes, so they've taken a lot of hits. Glendale wanted to make the west valley into more of an employment hub, an entertainment hub where people go. They wanted to be farmland -- this was a centerpiece to that, and this is a step back.

Ted Simons: So basically do we have any time table here regarding them getting something together or the foreclosure going through?

Mike Sunnucks: Ellman could still work something out. Just talking to him and his folks it doesn't sound that way, but sometimes these things work themselves out. The lender will look at their options, they could take the property back, somebody else could buy it or they could work something out with Ellman. The movie theaters will stay open, the stores will be open. No date yet on the sale. Sometimes these things get extended while they try to work something else. We'll see if he works something out or is ready to move on.

Ted Simons: Thanks for joining us.