Throughout his career, Ron Barness and his wife Daron were extremely (and still are) focused on giving back to the community. Before the series of lawsuits that former investors attempted to bring against Barness took place, he and his wife were running the Barness Family Foundation, which gave millions to a variety of organizations in need of monetary support.
Even though all of the lawsuits against Ron Barness have finally been dismissed, Barness lost most everything he had (through his business and personally). He is working now to re-build his business so that he’ll once again be able to continue his mission of giving back to community organizations and causes in need.
Real Estate Power Player, Ron Barness, Talks About the Dismissed Investor Lawsuits
The real estate market crash has devastated many around the U.S., especially in Phoenix, where prices had been drastically inflated until the real estate bubble exploded a few years ago. For Ron Barness, one of the biggest players in the Phoenix commercial real estate market, the crash meant losing everything.
In 2008 & 2009, a number of civil lawsuits were filed against Ron Barness, principal and CEO of Barness Papas Investments (the parent company of Retail Brokers, Inc.) and his business partner at the time, Alex Papakyriakou. Those judgments were filed by a handful of investors who alleged that Ron and his partner did not accurately report earnings and the sales of property. At the time of this report, all but one of the investor lawsuits has been successfully dismissed by the Maricopa County Superior Court. The single outstanding investor lawsuit is working its way through the legal system and will likely be dismissed soon.
Any other outstanding lawsuits against Ron Barness are from lenders related to the personal guarantees that he made on his real estate investments. Barness says he is working diligently to clear his name of the suits, which came about after those few investors lost money in other real estate transactions and were hoping to take advantage of the legal system in a down market.
Barness’ 27-year real estate career includes acquisition, development and disposition of more than 300 shopping center investment properties, almost all of which included the involvement of nearly 1,000 individual investors or partners. Until the collapse of the Phoenix real estate market in 2007, not a single investor had ever lost a dollar with Barness. In fact, for nearly 15 years, investors enjoyed returns ranging from 15% – 30% every year.
When the market did begin to take a turn for the worse, all of Barness’ projects were negatively affected; each property suffered extreme vacancies that impacted cash flow. In an effort to protect each investor’s monies and to salvage his huge investment portfolio, Barness began to inject his family’s personal savings into the suffering projects.
“The sheer magnitude of the market collapse and the size of the portfolio I controlled ultimately led to the demise of my business and the loss of the projects,” said Barness.
Each of Barness’ projects were financed through a total of 27 different lenders, and most of the transactions were personally guaranteed by Barness and his wife, a testament to how deeply he believed in each deal. No investor ever had personal liability for any of Barness’ real estate loans.
“It has been a devastating ride that has taken everything I have made for myself out from under me and my family, but more than 99% of the investors I have worked with over the years have stood by my side, believing that I have done the best I could do,” said Barness. “Although I have been forced to start over, I am fortunate that I have a wonderful family who believes in me and gives me strength. And, I know that whatever any individual investor lost through investing with me pales in comparison with what I have lost trying to protect their investment.”
Barness is now working hard to re-establish his career by turning the hard truths of what happened in the real estate market into valuable lessons that make him a much more cautious operator.
Arizona Economic Outlook 2007
Featuring Ron Barness, principal of Barness Papas Investments & Retail Brokers, Inc. (RBI)
Elliott Pollack said that the Valley is expected to create 80,000 jobs in 2006, and 60,000 in 2007. As many as 130,000 people will move to metropolitan Phoenix this year.
On housing, the article quotes RL Brown as saying “I thought we would have seen the housing market stabilize by now. Now home builders have a surplus and no lines at their sales offices. Reality set in for them a month ago.”
On commercial, it quotes Pete Bolton of CB Richard Ellis as saying “We need more industrial space. Until we get it, the Valley will lose more jobs as companies go where there’s space.”
More than 8 million square feet of warehouse space is under construction in metro Phoenix. About 3 million square feet of office space will go up in the Valley this year.
On the retail end, Ron Barness of Retail Brokers, Inc. stated that “it wasn’t long ago that high-end East Coast retailers weren’t interested in Phoenix. The opposite is true now.”
The Valley retail vacancy rate is 5 percent, lower than it’s ever been. Currently, 6.6 million square feet of retail space is under construction in the Valley.
Phoenix Economic Outlook 2007:
Featuring Ron Barness, featured presented about the Phoenix commercial market
Growth, commercial real estate prop up economy; Could ease slowdown in housing, employment
By: Catherine Reagor and Chad Graham
The Arizona Republic
Sept. 22, 2006 12:00 AM
How is the Valley’s economy doing?
Jobs and residential real estate growth have roughly returned to normal. Still, it can feel like a slump because last year was so unusually frenzied.
The state’s strong suits continue to be population growth and capital spending, especially in the now-booming commercial real estate market. If those two categories can pick up the slack, there could be less chance of a mild recession next year.
Here are other findings from Thursday’s 2007 Economic Outlook sponsored by the Greater Phoenix Chamber of Commerce:
Economy
“The Valley’s economy is in the seventh-inning stretch. It’s late in the game. There’s a recession in the future, but not now,” said Elliott Pollack of the economic consulting firm Elliott D. Pollack & Co.
• Almost 80,000 new jobs are expected to be created Valley-wide in 2006, and 60,000 in 2007.
• As many as 130,000 people will move to metropolitan Phoenix this year.
• Consumer and construction spending is expected to slow.
• U.S. residential spending compared with the overall gross domestic product is the highest it has been since the 1940s.
Housing
“I thought we would have seen the housing market stabilize by now,” said Valley housing analyst RL Brown. “Now home builders have a surplus and no lines at their sales offices. Reality set in for them a month ago.”
• The typical price of a new Valley home climbed from $225,000 to $300,000 last year.
• Single-family housing permits were down 45 percent in August compared with a year ago.
• For the first eight months of 2006, home permits are down 23 percent from 2005’s record pace.
• There are 47,000 homes for sale Valley-wide, more than double the listings from a year ago.
Commercial real estate
“We need more industrial space. Until we get it, the Valley will lose more jobs as companies go where there’s space,” said Pete Bolton, senior managing director of CB Richard Ellis. “We won’t overbuild. Banks and the commercial market learned their lessons last time.”
• More than 8 million square feet of warehouse space is under construction in metropolitan Phoenix. Half of that is spec space without a signed tenant to move into it.
• About 3 million square feet of office space will go up Valley-wide this year.
Retail
“It wasn’t long ago that high-end East Coast retailers weren’t interested in Phoenix,” said Ron Barness of Retail Brokers Inc. “The opposite is true now.”
• The Valley’s retail vacancy is 5 percent, lower than it’s ever been.
• Currently, there’s 6.6 million square feet of retail space under construction in metropolitan Phoenix.