Condominium Developer
Transaction Type: Restructuring
Industry: Real Estate
Location: Southeast United States
Client: Developer
Role: Financial Advisor to the Debtor in Possession
The client was a prominent developer of condominium communities in the Southeast. This nearly completed, high quality, high-rise project in Tampa, Florida was actively selling units when the credit and housing crisis brought sales to a screeching halt. Five banks were involved in a $200,000,000 loan facility for the construction of the condos. When sales came to a standstill, the developer was forced to seek Chapter 11 bankruptcy protection for the project.
Cascade was hired by the debtor to develop a complete financial analysis of the project, the market, and the financing structure and options. Over the course of the following three months, Cascade built a very sophisticated model, which analyzed and accounted for a wide range of variables as they related to the project. Among other factors, comparable sales, prices per square foot, absorption rates, retail rates and absorption expectations, alternative uses for the property, reserve requirements, home owners association requirements, taxes and all of the banking coverage and cash flow concerns were built into the model.
This thorough and complex model was then presented individually and collectively to all of the parties. Initially, each bank had a different approach in mind for the disposition of the project and a repayment of their loan. Through an iterative process of meetings and discussions, all of the parties were able to agree on what their new expectations were for the project in the new economic environment. This new consensus then allowed the client to develop a controlled liquidation plan for the project, which would provide the maximum return to the lenders and a potential return to the developer.