July 26, 2008

Sandler Takes Loss in Sale of Land in Virginia Beach

By Deirdre Fernandes and Richard Quinn, The Virginian-Pilot, Norfolk, Va.

Jul. 26--VIRGINIA BEACH -- Local real-estate giant L.M. Sandler & Sons Inc. sold a key parcel on Virginia Beach Boulevard this week and is trying to unload other properties as it appears to be streamlining to get through the country's economic downturn.

The company, operating as Greendale LLC, sold the former Home Quarters Warehouse to Virginia Beach developer Michael Sifen for $13 million, according to a deed recorded Tuesday. Sifen and several partners own an adjacent property that fronts Independence Boulevard.

"It's a good time to buy if you have the capital to do it," said Eddie Bourdon Jr., Sifen's attorney.

Sifen bought the 12-acre plot, known as the HQ site, for $500,000 less than L.M. Sandler paid in 2004. The site is assessed at $12.7 million, according to the city assessor's office.

The deal came together quickly, Bourdon said. "It took less than 90 days from contract to close. It's not typical."

L.M. Sandler officials did not return phone calls. The company, owned by Virginia Beach brothers Steve and Art Sandler, in recent months has halted or scaled down some high-profile projects.

The company sold one of its three jet planes and in June, the Sandlers were delinquent on some local real-estate taxes. They owed Hampton Roads communities more than half a million dollars in taxes and late fees, according to public records.

In the Raleigh area, building contractors have filed nearly $10 million in liens against companies owned by the Sandlers, according to the Triangle Business Journal.

During the housing boom, the Sandlers had projects throughout the East Coast and last year had more than 9,000 homes planned for Hampton Roads. But in May, they shuttered a luxury marina project that was partially built in Marathon, a community in the Florida Keys. The management firm for L.M. Sandler told the city the company intends to sell its part and bring in an investor to the finish the project, said Clyde Burnett, the city manager.

L.M. Sandler is also trying to sell 1,250 acres in Prince George's County, Md., outside of Washington.

The company had an agreement dating back to 2005 to sell the land for $134 million to Lennar Corp., one of the nation's largest home builders. But the deal started to crumble in December, and both companies have since filed in federal court.

Lennar officials argued in court documents that the Sandlers wouldn't let them inspect the property before closing and had not fulfilled contractual obligations. The Sandlers accused Lennar of trying to back out of the deal after the housing market started to slide.

Lennar notified the Sandlers on July 3 that it was terminating the agreement and wants its $20 million deposit back, according to court documents.

In Virginia Beach, the sale of the HQ site has long been expected. L.M. Sandler officials hinted last year that there were going to be major changes to the project and a possible change in ownership. At that time, Sifen was not the potential buyer, Bourdon said.

The development the Sandlers planned for the HQ property was called City Walk and included homes, shops and a hotel that mirrored Town Center, which is just to its east. Whole Foods Market Inc., the high-end organic grocery chain, had expressed interest in the site.

Beach officials supported that plan, because they view the HQ property as a way to extend Town Center across Independence Boulevard. Mark Wawner, the city's project manager for Town Center, said the Beach wanted to marry the HQ site to land that Sifen already owned.

"Now that it's under one ownership," Wawner said, "it will be much easier to get the project the city is hoping for." He said the city would consider a partnership with Sifen to push the project forward.

"We would certainly explore those options with him, depending on the merit of his project," Wawner said. "If he decides he wants to do a big-box project, there won't be any public role."

Development is a few years away, Bourdon said.

"With the market right now, nobody is doing anything. They have no current plans."

Deirdre Fernandes, (757) 222-5121, [email protected]

Richard Quinn, (757) 222-5119, [email protected]


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