The Bloomington office of real estate giant CBRE Group Inc. has been chosen to market more than 500 lots associated with now-defunct homebuilder Rottlund Homes.
A victim of the housing market's collapse, Rottlund was one of the biggest homebuilders in Minnesota but shut down late last year after nearly 40 years in business.
Veteran broker Richard Palmiter, who is leading the charge for CBRE, said he expects demand for the lots to be strong from both builders and investors. He said that the overall listing price exceeds $6 million for the lots, which are in 10 developments throughout the Twin Cities suburbs.
Palmiter said proceeds from the sale will be used to pay Rottlund's secured creditors. He'll market them in bulk or by development, he noted.
Ten developments are in play, including Wildflower Meadows in Otsego; the Reserve in Plymouth; Victor Gardens in Hugo; the Lakes and Club West in Blaine; Arbor Crest in Inver Grove Heights; Ridgewood in Savage; Inspiration in Bayport; High Grove in Maple Grove, and Harmony in Rosemount.
Herb Tousley, director of the Shenehon Center for Real Estate at the University of St. Thomas, said the lots in attractive areas, such as Maple Grove, will likely draw the most interest. "You're starting to see some niche residential development if the site is right," he said.
In addition, some nationally known builders, such as Florida-based Lennar Inc., have started to buy up lots nationwide for future development because the price is right and the inventory vast. "The land is so cheap, and they have the capacity to buy it and then sit on it for a while, at least until the market comes back somewhat."
Palmiter said CBRE was hired by Rottlund's receiver, whom he wouldn't name.
But court documents say the receiver chosen by Rottlund to liquidate its assets is California-based Hearthstone, which calls itself the largest institutional investment manager in the country dedicated to the residential building industry.
According to its website, Hearthstone specializes in residential building nationwide, managing more than $12 billion in investments that involved more than 111,000 homes and 20 states. These investments have consisted of single-family subdivisions, condos and townhouse developments, master-planned and mixed-use communities. The company has managed debt and equity investments from more than 20 public and private pension funds, university endowments, Fortune 500 companies, Fannie Mae, more than 30 financial institutions and several states.
Rottlund owes Bank of America, M&I Bank and KeyBank about $28.5 million, according to a complaint the banks filed in November in Ramsey County Court.
When Rottlund announced that month that it was going out of business, an executive said about 20 homes were still under construction but would be completed by year's end. A call to Rottlund's Twin Cities office was referred to Hearthstone. A representative from Hearthstone did not return a phone call for comment Monday.
Palmiter and his team at CBRE are also marketing the site of the former Ford plant in St. Paul, one of the largest pieces of real estate left to be developed in the Twin Cities. The manufacturing facility was shut down in December.
Janet Moore • 612-673-7752