Two Tucson apartment complexes and one in Phoenix owned by a real estate investment group in San Clemente, Calif., have filed for bankruptcy.
The complexes each operate under separate limited-liability corporations managed by real estate agent Anthony LaRuffa.
Cornerstone Apartments, 3985 N. Stone Ave.; Woodland Village Apartments; 3055 N. Flowing Wells Road; and Highland Gardens, in Phoenix, are seeking Chapter 11 bankruptcy protection to restructure their debts.
LaRuffa, who operates CHR Commercial in San Clemente, referred all questions about the bankruptcies to his attorney, Eric Slocum Sparks.
The investment group bought the complexes in 2007, and they were managed by a third-party company that mishandled funds, Sparks said. Because of the unpaid debts, he said, the investors decided to replace the management and filed for bankruptcy.
"They're basically taking back control of their units," Sparks said.
Despite buying at the peak of the market, the investors avoided foreclosure by paying the mortgage, he said.
Documents filed in U.S. Bankruptcy Court show each of the apartment complexes has between $1 million and $10 million in assets. The documents show the same dollar range for the corporations' liabilities.
For Mission Creek I LLC, which does business as Woodland Village Apartments, "City of Tucson-Sewer" is listed as one of the largest unsecured creditors, with a claim for $18,556 and another for $16,693.
Woodland Village has about 240 units and will continue to operate as a conventional apartment complex, Sparks said.
The other Tucson corporation, 3985 Cornerstone Apartments LLC, lists Custom Concepts, a contractor based in Scottsdale, among its largest unsecured creditors, with a disputed claim of $78,000. Cornerstone, with about 230 units, will be turned into a complex for student housing.
The third corporation is 4728 Camelback LLC, which does business as Highland Gardens at 4728 N. 15th St. in Phoenix. That property has been approved for conversion into condominiums, though the investment group may sell the property to collect on its equity, Sparks said.
Contact reporter Dale Quinn at firstname.lastname@example.org or 573-4197.