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Wichita properties that were in the Minnesota Guys’ portfolio

  • The Wichita Eagle
  • Published Wednesday, May 14, 2014, at 8:48 p.m.
  • Updated Tuesday, May 20, 2014, at 11:52 a.m.

1. 125 N. Market building

Recent history: Formerly known as KSB&T building and SC Telcom building. Minnesota developers Michael Elzufon and David Lundberg bought it in 2007 and renamed it Wichita Executive Centre. At more than 310,000 square feet, it was their biggest project. They spent $600,000 on the lobby before running out of money. Infamous in recent years for failing air conditioners and elevators.

What’s happening: Their biggest creditor, Security National Life Insurance Co. of Salt Lake City, took over the property about a year ago and is putting in $5 million for new elevators, new heating and air conditioning and renovations on several floors. It is about 40 percent leased.

Future: Aggressively marketed by Patrick Ahern of Martens Commercial. No new tenants, he said, but “a lot of interest.” Several floors have been speculatively renovated and are ready for tenants. Ahern calls space B-plus to A-minus in quality.

2. 150 N. Main building

Recent history: Long-time headquarters of Commerce Bank until it left downtown a decade ago. The Workforce Alliance of South Central Kansas moved in in 2005 but left last year, citing the condition of the building systems. The building traded ownership among investors affiliated with the developers several times and is now owned by Minnesota investor Joseph Moosally.

What’s happening: Moosally has put the building up for sale. Ahern, the agent, said the upper floors are in good shape, but the elevators don’t work and a water leak over the winter damaged the main floor.

Future: Ahern said the building would make a great residential/office/retail redevelopment project similar to the Lux across the street. It has a parking deck and walkway access to another.

3. Exchange Place/Bitting Building

Recent history: Exchange Place, 110 N. Market/107 N. Market, was the home of Fourth National Bank until the 1980s, when it became a general office building. Both buildings, across Market from each other, have been vacant and deteriorating for more than a decade. Elzufon and Lundberg bought them in 2006 and by 2010 had assembled a financing package to convert them into a $50 million-plus, 230-unit apartment project running between the two buildings, which would have included tearing down the adjacent Michigan and Lerners buildings, and building a new apartment building along Douglas, plus a 273-stall parking garage.

What’s happening: The project is not dead. Elzufon and Lundberg turned it over to a partner named John McWilliams in 2012. McWilliams was dealt a delay two years ago when a federal court ruling changed how federal historic tax credits could be used, and the project was put on hold while new federal rules were issued.

The future: Those rules came down in December and McWilliams is now trying to sell the $9 million in federal tax credits. The rest of the financing remains in place, said his local representative attorney Harvey Sorensen of Foulston Siefkin. Considering that it was in limbo for two years, Sorensen said he considers the project to be gaining momentum.

4. Broadway Plaza

Recent history: Elzufon and Lundberg bought the building at 105 S. Broadway in 2005 and split the floors in separate properties and sold them off, mostly to small investors from California. All have gone into foreclosure.

What’s happening: One of Elzufon and Lundberg’ creditors, Minnesota-based Profinium Bank, will probably allow their last holdings in the building go this summer at a tax sale, said the leasing agent Craig Simon of Landmark Commercial. He estimated occupancy at about 65 to 70 percent.

The future: Simon said the property is in pretty good shape, and its prospects are decent. The new owners are local and bought their floors at a low cost.

5. Farmers & Bankers Building and Landmark Plaza Building

Recent history: Elzufon and Lundberg bought the conjoined general office buildings at 200 E. First St. and 212 N. Market in 2006. They auctioned off the properties in 2013 to Bankers East LLC, an investment company owned by a Canadian dentist, because they said they were losing money.

What’s happening: Leasing agent Delton Sandefer, Essential Properties, said he has added tenants and the buildings are now about 80 percent full.

The future: Good.

6. Hubris Building

Recent history: The 216 S. Market property was the home of Internet service provider Hubris Communications until six or seven years ago. More recently it was home to Mosaic, a church that ran a homeless shelter in the building. Fidelity Bank bought the building for $72,050 in January 2013.

What’s happening: it remains vacant. Fidelity Bank is still considering its options, said bank vice president Al Sanchez.

The future: Unknown.

7. Kaufman Building

Recent history: Elzufon and Lundberg bought the building at 206-210 S. Market in 2004. It is now owned by their creditor, Quad J Holdings, the real estate arm of SNB Bank. It was renovated and the top floors are home of the parole office for Kansas Department of Corrections and the ground floor to Job Squad.

What’s happening: The building is up for sale, marked at $936,500, as an investment property. The agent is Steven Martens of Martens Commercial.

The future: Fairly bright, at this point, because it has been renovated and has positive cash flow, Martens said. About 9,000 square feet are vacant.

8. Kress Building

Recent history: Once the Kress department store, the building at 224 E. Douglas was the headquarters of locally owned Lone Star Steakhouse until the chain was sold in 2006. The chain’s new owner moved the restaurant chain’s back-office functions out of Wichita in 2010. Elzufon and Lundberg bought the building for Minnesota investor Steve Cheney, who still owns it.

What’s happening: The building is about 20 percent occupied, according to agent Delton Sandefer. Cheney owes $185,814 in back taxes on the building.

The future: Sandefer said he is working with potential tenants who would raise occupancy in the building to about 60 percent.

9. Petroleum Building

Recent history: Elzufon and Lundberg bought the building at 221 S. Broadway in 2005, split the floors into separate properties and sold many of them, mostly to small California real estate investors. When some of the the buyers and Elzufon and Lundberg ran into financial trouble, the cost of operating the building fell onto the remaining tenants, which accelerated foreclosures. Eventually all of the original buyers went into foreclosure.

What’s happening: Two of the current tenants, Kyle Hughes and Emmanuel Kolluri, bought their floors out of foreclosure and then bought the rest. They are close to acquiring the whole building.

The future: Hughes and Kolluri have leased most of the building and expect to continue reinvesting.

10. Orpheum Office Building

Recent history: Elzufon and Lundberg bought the 200 N. Broadway office building attached to the Orpheum Theatre in 2006. They split the floors into condominiums and sold them off to California investors.

What’s happening: Most of the floors went into foreclosure and have been resold to local investors. The Orpheum Theatre bought the third floor out of foreclosure, said Craig Simon, the buildings leasing agent.

The future: Decent, Simon said, although one floor remains vacant.

11. Sutton Place

Recent history: Elzufon and Lundberg bought the building at 209 E. William in 2006, broke the floors into separate properties and sold them off, mostly to California investors. All were foreclosed on.

What’s happening: Attorney Abdul Arif, a tenant in the building, has put together investors to buy and slowly redevelop most of the floors. Two of the floors are owned by Wichita Data Center.

The future: Arif and his investors are renovating the 10th and 11th floors into event space. Their long-term hopes to attract tenants hinge on the city completing the renovation of a parking garage across the street later this year.

Dan Voorhis

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