BENTONVILLE — Ten buildings at Pinnacle Point office park in Rogers sold Tuesday for $24.1 million at a foreclosure auction on the front steps of the Benton County Courthouse.
The high bid was from Hunt Ventures LLC of Rogers, which is primarily owned by Johnelle Hunt, widow of trucking magnate J.B. Hunt. Tim Graham, president of Hunt Ventures, was at the courthouse to place the bid.
“I would prefer not to have it, but it’s just the right thing to do in the price range since we own the land right there beside it,” Graham said after the auction. “It’s a business decision and it makes sense.”
Hunt Ventures owns most of the property in the Pinnacle Hills area along Interstate 540 in Rogers, adjacent to Pinnacle Point.
Johnelle Hunt and Graham have been part owners of the Pinnacle Point property before. They conveyed their ownership interest to Bill Schwyhart and Robert Thornton in 2007 when The Pinnacle Group split up. But the new owners didn’t refinance the debt, leaving Hunt potentially on the hook for about $12 million in bank debt she had guaranteed before the split.
Hunt has reached a settlement with Metropolitan National Bank of Little Rock over the guaranty, but Graham said he couldn’t reveal the details.
Metropolitan made the only other bid Tuesday for Pinnacle Point, with its $24 million offer being eclipsed by Hunt Ventures. About 30 people attended the auction.
Schwyhart, a Rogers real estate developer and former BMW dealer, began developing Pinnacle Point in 1999. The office park and an adjacent shopping center, Village on the Creeks, spurred the development of western Rogers along I-540. J.B. Hunt became Schwyhart’s partner in 2003 and died in 2006 after he slipped and fell in an icy parking lot.
Metropolitan won a $38.9 million foreclosure judgment against Pinnacle Point Properties on Sept. 7. Schwyhart claims Metropolitan had charged him an exorbitant interest rate - 7.75 percent - on his mortgage.
Schwyhart, who attended the auction, said a higher bidder was shut out of the process.
Art Edwards, president and CEO of Southern Resorts & Leisure Inc. of Long Beach, Calif., wouldn’t reveal how much he would have bid but said “we were prepared to win the auction.” Edwards’ letter of credit was from Renfrew Security Bank & Trust Ltd. of Turkey.
Circuit Clerk Brenda DeShields conferred with Craig A. Campbell, who represents DeShields in her role as commissioner of sales. Then they looked up Arkansas Code Annotated 18-49-104, which states “In all sales on credit, the purchaser shall execute a bond, with good surety, to be approved by the person making the sale ...”
DeShields then denied Edwards’ eligibility to bid. “There were just some problems with his bond. I have no way of validating it,” she said.
Schwyhart wasn’t pleased. “I personally offered the bank $27.5 million last week,” he said. “I offered them millions more last week, and they said, ‘Oh, it will bring a lot more than that.’”
Robert K. Rhoads, Schwyhart’s attorney, said the bank will look to Schwyhart to cover the difference between the $24.1 million selling price and the $38.9 million judgment.
Andrew King, an attorney for the bank, said after the auction that he had no comment.
On April 20, Schwyhart filed bankruptcies for eight limited-liability companies, which include a total of 11 buildings, under Chapter 11. Schwyhart claimed unpaid debts of $41.6 million to two state banks - $35 million to Metropolitan and $6.6 million to Chambers Bank of Danville. Chapter 11 is a request to reorganize the business and pay off creditors over time.
Federal Bankruptcy Judge Ben Barry threw seven of those petitions out, saying Schwyhart’s reorganization plan wouldn’t make the properties profitable. Metropolitan held the mortgages on the seven properties. The one bankruptcy allowed to move forward was for Pinnacle Point Properties LLC, which was the umbrella organization over the other properties.
Schwyhart said he has appealed the bankruptcy ruling regarding the seven properties to the U.S. Court of Appeals for the 8th Circuit in St. Louis.
Business, Pages 27 on 09/29/2010