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Mesa del Sol Land Value Declines

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Forest City Covington has spent the last nine months informally marketing for sale its 3,000 acres at the Mesa Del Sol master-planned community, but no acceptable offers have been made, and it is no reflection of the viability of the project, according to the company.

“We went to the market to see what it was worth. There was a big write-down (in value),” Michael Daly, president of Forest City Covington, told the Journal.

Offering the acreage for sale stems from a decision made a year ago by the board of directors of Cleveland, Ohio-based Forest City Enterprises, one of the two corporate partners that make up Forest City Covington.

The decision was applied broadly to a sell-off of Forest City Enterprises’ non-core projects, both wholly owned and joint ventures, according to a company filing with Securities and Exchange Commission. Forest City Enterprises wanted to focus on two land-development projects, the Stapleton project in Denver and its Central Station project in downtown Chicago.

“Mesa del Sol is not a core asset,” Daly said. “We are only going to do it (sell) if it makes (financial) sense.”

The recession and its lingering effect on Albuquerque’s economy has reduced values of most all types of real estate, including land. Last year, for example, Mesa del Sol took a $15 million write-down in value, according to a Forest City filing with the SEC.

When asked what Mesa del Sol was worth, Daly declined to answer and said, “The question is not what Mesa del Sol is worth. The question is ‘When will the economy turn around?’”

As for what might happen to their Mesa del Sol acreage is sold, he said, “Mesa del Sol is not just a Forest City Covington project. It’s a joint project with the University of New Mexico, the state of New Mexico, the mayor and city of Albuquerque. No matter who buys the property, it’s still Mesa del Sol. The master plan is done.”

In 2005, Forest City Covington signed an agreement with University of New Mexico and the New Mexico State Land Office to develop 9,000 of the total of 12,900 acres that comprise Mesa del Sol.

In mid-2006, the company bought 3,000 of those developable acres, which is what is for sale now.

The community has about 1 million square feet of commercial space, which is either privately owned or could to be sold off separately from the 3,000-acre offering. Home construction began in early 2012 and, as of Thursday, city records show 54 building permits have been issued for single-family homes there.
— This article appeared on page B1 of the Albuquerque Journal

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