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Real estate meltdown leaves developers reeling

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It was another rough year for the real estate sector in 2011, as the homebuilder Estridge filed for bankruptcy, strip-center specialist Broadbent struggled to hold onto its headquarters, and Centre Properties faced a $43 million foreclosure suit.

Local homebuilder Paul Estridge Jr. in late September filed Chapter 7 personal bankruptcy, agreeing to surrender his two homes—one in Westfield and one in Florida—and other possessions to satisfy a mountain of debt he accrued from his former business.

Estridge said he owes a list of creditors including banks, suppliers and vendors more than $50 million. In a bankruptcy filing with the U.S. Bankruptcy Court Southern District of Indiana, Estridge listed assets worth between $1 million and $10 million. Estridge told IBJ he thought his assets had a value of $5 million or less.

The Estridge Group, a fixture in the Indianapolis-area’s homebuilding industry for more than 40 years, became part of Houston-based David Weekley Homes in April when the company could no longer keep up with a mounting pile of debt. Estridge took over the business from his father, Paul Sr., in 1992.

Lenders in 2011 began foreclosure proceedings on The Broadbent Co.’s downtown headquarters as part of a $25 million federal lawsuit against the Indianapolis-based real estate developer.

realestate Lenders sought to foreclose on properties held by The Broadbent Co. and other retail developers. Estridge was among the homebuilders unable to withstand the downturn. (IBJ File Photo)

The Huntington National Bank and PNC Bank filed the complaint in U.S. District Court in Indianapolis on July 22, charging that Broadbent defaulted on various construction loans and mortgages dating from February 2007.

Broadbent, a strip-center real estate specialist, borrowed money to buy and renovate its headquarters at 117 E. Washington St.

IBJ reported in July that George Broadbent sold The Broadbent Co. to his wife, Mary Clare Broadbent, for $50,000 in March 2010 as the mounting lawsuits threatened his control of the company.

As lenders circled, Broadbent also transferred his ownership interests in five retail properties to his wife for “estate planning reasons,” and sold to her his ownership interest in nine other properties for $150,000, court records show.

Broadbent’s properties seeking bankruptcy reorganization include the Castleton Plaza and Greenwood Pointe shopping centers.

The developer Centre Properties also was ailing in 2011, as Boston-based U.S. Bank filed to foreclose on its 130,000-square-foot Centre North Shops at 8510 E. 96th St. in Fishers, the 17,900-square-foot Southport Shops at 7225 U.S. 31 South, and the 13,300-square-foot German Church Shops at 10935 E. Washington St.

Centre Properties, founded in 1985 by Craig W. Johnson and James F. Singleton, has developed more than 2.2 million square feet of retail space in the Indianapolis area, according to the company’s website.

The bank brought the $43 million foreclosure lawsuit in November.•
 

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  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

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  5. It is sad to see these races not have a full attendance. The Indy Car races are so much more exciting than Nascar. It seems to me the commenters here are still a little upset with Tony George from a move he made 20 years ago. It was his decision to make, not yours. He lost his position over it. But I believe the problem in all pro sports is the escalating price of admission. In todays economy, people have to pay much more for food and gas. The average fan cannot attend many events anymore. It's gotten priced out of most peoples budgets.

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