Creekside: Troubled Promised Land

Five years ago, Mitchell Massey was having breakfast at Fayetteville’s Village Inn seated next to a table of older gents he didn’t know. And, presumably, they didn’t know him.

His ears perked up when they began talking about a real estate deal that made the front page of the newspaper that April morning.

“Can you all believe that? Who is that fool Mitchell Massey who paid $17 million for a piece of dirt in Rogers, Arkansas?”

That was the day after he and partner Gerald Johnston bought an undeveloped 56-acre commercial tract north of Pinnacle Hills Promenade, the nearly 1 million-SF lifestyle center under construction at the time.

Massey admits a massive wave of self-doubt washed over him.

“I may have just made the biggest mistake in my life,” he said.

Fifteen months later, he realized that moment was probably the worst case of misplaced buyer’s remorse experienced in Northwest Arkansas. He and Johnston, the retired chief financial officer of Tyson Foods, resold the property for $27.1 million to area developer Brandon Barber.

“We didn’t make $9 million, but we were pretty close,” said Massey, noting they invested about $1.5 million for dirt work and other improvements. “It was certainly one of the better projects I was involved with in Northwest Arkansas.”

During the past 10 years, the 56-acre property attracted a who’s who cast of real estate players to its ownership history. Along the way, the tract was part of deals totaling more than $60 million.

“When you really think about it, for that time in the market, Northwest Arkansas was ranked as the No. 1 or No. 2 growth MSA in the country,” Massey said, of the Fayetteville-Springdale-Rogers Metropolitan Statistical Area. “And the epicenter was that piece of property. We felt like that was the No. 1 site, a premier site in the country.”

His plans for the property were to develop a significant medical park on the west side across Promenade Boulevard from the new Mercy Medical Center campus, with traditional office space on the east side and frontage lots devoted to retail and restaurants.

That all changed when Barber offered to buy the property because of his designs for a neighboring property. As Massey recalls, the deal flowed out of too many drinks at Bordino’s, the upscale Italian restaurant in Fayetteville, topped off with Barber’s big plans.

“He had the grand vision of a 22-story Westin Hotel on a 7-acre site where Chuck E. Cheese is now,” Massey said. “He was dropping in a huge asset. We’d be getting all the benefit of him doing that, so he decided to buy the property from us and reap that reward.”

The Westin project never happened even after Barber tried to move the dream to another location in Rogers. And the kid-friendly Chuck E. Cheese’s restaurant that did hasn’t carried the same cache. Barber also is gone from the ownership picture for the 56-acre tract.

Today, it is owned by Pinnacle New Hope LLC, led by Johnelle Hunt and Tim Graham. Once part of the Creekside development and now known as Promenade Pointe, the property has remained dormant except for a Walgreen’s developed last year.

“We’re here for the long run,” said John George, executive vice president with Pinnacle Management Services LLC, which oversees the Hunt-Graham holdings.

“We can hold it for as long as we need to until the right time comes along.

“In 2002-07, the pace of development accelerated. The pendulum has swung back the other way, but it’s beginning to pick up again. We just have to wait for the best opportunity to come along to make it work.”

The property’s developable area covers about 48 acres when factoring out a large retention pond, streets, etc. The land bears a 2009 amended mortgage of $29.6 million held by Simmons First Bank of Northwest Arkansas.

Using these numbers, the property is carrying a valuation of $14.15 per SF.

Little Rock’s Clary Development Corp. was on the front end of the ownership trail, selling the 56-acre tract as part of an improved 90.6-acre deal in January 2004 for $9.7 million ($2.45 per SF).

“We saw where it sold several different times afterward and thought, ‘Gosh, maybe we should have held onto the property a little longer,'” said Jeff Maxwell, vice president with Clary Development. “But it’s hard to do that and sell with perfect timing.”

Steve Clary and Tom Terminella purchased the 56 acres as part of a 311-acre farmland property nearly four years earlier for $5.6 million (41 cents per SF).

But no one has topped Massey and Johnston’s $27.1 million transaction that produced their almost $9 million windfall in 2005.

“We were fortunate enough to be among the latter people to get in and out,” Massey said. “It’s still a great piece of property, but the market is just going to have to come around.” 

 

 

 

Tracking the Epicenter of the

Northwest Arkansas Building Boom

 

March 2000: Developer Gary Combs of Springdale gains an option to purchase 311 acres in Rogers from Evelyn Rife. By his account, the option starts with Jean Tyson, his mother-in-law at the time, is transferred to her son, Johnny Tyson, and eventually to Combs. The Rife property, between New Hope Road on the north and Perry Road on the south, includes an additional 72-acre tract along the east side of Interstate 540 that later was donated by her estate to St. Mary’s Hospital of Rogers. This site in 2008 becomes home to the new Mercy Medical Center campus, with a 220-bed hospital and 115,000-SF medical office building.

 

July 2000: CT Northwest LLC, led by developers Steve Clary of Little Rock and Tom Terminella of Fayetteville, acquires the pastureland for $5.6 million (41 cents per SF) from the Evelyn Rife estate. Their plans are to develop an anchored commercial “power center” on the northern 125 acres and a regional retail center on the southern 186 acres. Combs is not happy and casts a cloud of potential litigation, saying Terminella did a paperwork shuffle to bypass Combs’ purchase option and highjack his development plans. Terminella disputes that account. CT Northwest later is able to rezone the northern 125 acres for commercial development and work out the realignment of New Hope Road (Highway 92). However, Clary and Terminella run into a political roadblock to get the southern tract rezoned courtesy of Combs and his allies.

 

March 2001: Great Northwest Development LLC, led by Combs, trucking magnate J.B. Hunt, Tim Graham and Bill Schwyhart, buys the southern 186 acres for $4 million (about 50 cents per SF) from CT Northwest. The sale marks a victory for Combs, who enters the ownership picture at a price covered under his purchase option with Rife. The needed commercial rezoning for the Pinnacle Hills Promenade lifestyle center follows a couple months after the transaction. Meanwhile, Terminella sells his interest in CT Northwest to Clary.

 

January 2004: Terminella returns to the northern Rife acreage through Creekside Development LLC. The group purchases the improved 90.6 acres remaining after roadway dedications and more from CT Northwest for $9.7 million ($2.45 per SF). Members of Creekside include The Nabholz Group Inc., led by Greg Williams; Nabholz Properties Inc., led by Charles Nabholz; Nabco Mechanical & Electrical Inc.; Terminella & Associates Inc.; Tom Morter; Terry Johnson; and CHIS LLC, led by Jim Von Gremp. Terminella will sell his interest in the property several years later.

 

April 2005: Strategic Development Partners LLC, led by Fayetteville developer Mitchell Massey and Gerald Johnston, retired chief financial officer at Tyson Foods Inc., buys a 56-acre piece of the Creekside property for $17.9 million ($7.33 per SF). The tract is south of New Hope Road between Promenade Boulevard and Bellview Road.

 

July 2006: Rogers 45th LLC, led by Brandon Barber, acquires the 56-acre property for $27.1 million ($11.10 per SF). Barber’s motivation for the deal is to reap the expected valuation bounce caused by his planned 22-story, $100 million Westin Hotel project to the west. His plans for the parcel call for a $200 million retail and office development dubbed Forty-Fifth at the time.

 

March 2007: Ownership is transferred to Pinnacle Barber Partners LLC as Barber enters a partnership with the Pinnacle Group investors, led by Johnelle Hunt, Graham, Schwyhart and Robert Thornton. In August, Schwyhart and Thornton exit as the Pinnacle Group breaks up. Barber later departs, several months ahead of his bankruptcy, and ownership of the land moves into Pinnacle New Hope LLC, led by Hunt and Graham. The property, now known as Promenade Pointe, remains undeveloped except for a Walgreen’s that opened last year.