Attorney Abdul Arif and two partners say they have reached agreement to take ownership of most of Sutton Place from the two troubled Minnesota-based developers behind Real Development and their bank.
The largely vacant 11-story office building at Market and William streets had been legally divided into floors and sold separately. Arif and his partners now own seven of the floors and Arif owns one by himself, where his office is located.
The partners, called Mayflower Investment Group, said Monday that they plan to redevelop the building slowly, starting with the penthouse on the 11th floor. They see that space as used for private functions, rather than as a business.
That may change a bit when they redevelop the 10th floor into a space for public functions, they said.
Arif said they plan to open the 10th floor this fall, in concert with the city of Wichita’s completion of a $9.7 million renovation of the adjacent parking garage across the street.
He said they will rename the building Mayflower Plaza.
They will seek industrial revenue bonds from the city and, as they get interest from prospective tenants, they will spend to upgrade the floors to rentable condition.
The other partners are Ali Azmi and Navid Haeri.
They negotiated to take ownership of the seven floors from Kaw Valley Bank of Topeka, which had given a $2 million mortgage to Sutton MN, owned and operated by Minnesota developers Michael Elzufon and David Lundberg in 2007.
Arif said he negotiated with Kaw Valley as the creditors, and with Elzufon and Lundberg, who were still listed as the owners.
Arif wouldn’t say what the partners paid for the floors but said, “I can tell you it wasn’t $2 million.”
Messages left for bank officials were not immediately returned.
Arif said he understands taking on such a large redevelopment project appears daunting, but he said that he and another owner are already paying to maintain the building by themselves. He said it costs about $10,000 a month to heat, cool and light the building.
“We’ve already experienced the worst-case scenario,” so there’s not much more risk, Arif said.
They estimated the ultimate cost to renovate the seven floors at roughly $1 million.
Jeremiah Connelly, who owns two of the floors as a home for his technology businesses, Wichita Data Centers and Kansas Hosting, said he’s cheered by the move.
“It’s definitely good news,” Connelly said. “For all those empty floors, Real Development hasn’t been paying for any of their share of the building expenses. Any new owners will help.”
Sutton Place has had a difficult recent history. The building was run down and largely vacant when Sutton MN bought it in 2007. The Minnesota developers divided it up and sold off the floors, mostly to small California Investors. They held on to several floors themselves.
They were able to find tenants for a few floors, but never put much money into renovating the rest of the building and then ran into financial trouble in 2009 and 2010.
Lundberg said they’re done with the Sutton Place and are within 60 days of turning over their last few floors to their mortgage holders.
“We’re just about done with Wichita,” Lundberg said. “That’s it.”
He said he wished Arif – and others who took over their troubled downtown buildings – well.
“I wish them luck, finishing what we started,” he said.