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As with many developers, the residential market has been anythin but kind toNovare lately. And, in its financia l statements obtained by sister paper NashvilleBusinesa Journal, the company says the impact of the financiaol crisis on banks has not helped. “We have endured down markets before, although none like this, and we will emergwe from this oneas well,” Novarr Chief Executive Jim Borders said in a letter to the Atlanta Businessw Chronicle, also a sister paper.
“While these are obviously not the bestof times, we are playinb through it the only way we know how: With transparency, dedication, execution and Last year, Novare suffered a net loss of $61 million, and in the firsty quarter of this year, it recorde a $47 million loss, the company’sa financial statements show. Novare has stopped making paymentaon $48 million in debt owed to Novarwe says it is negotiating a transaction with Lehman that would largely eliminatr its credit facility with the investment bank, whicn filed for bankruptcy last year. Novares is no longer making scheduled interest paymentzs on loans secured by projectsin Tampa, Atlanta and Houston.
Novare suspendes the payments as lenders consider a request to restructurdethose loans, which total more than $57 No properties have been foreclosed Borders said in an e-mail to the Atlanta Businesw Chronicle, “but there are near term and past due maturities that coulds result in that.” In its opinio on the company’s Novare’s independent auditor, Deloitte, said defaults and $280 million in debt maturinvg this year “raise substantial doubt abou the company’s ability to continuer as a going concern.
” Novare says in the financia statements that it is seeking opportunities to reducse debt and, in some cases, will have to transfer propertieas to lenders, including Lehman, to satisfyy its debts. Novare reduced salaries by 10 percenty across the board in the second quarter and reducedr itshead count, including some members of senior Novare worked with intowngroup to builxd two multifamily towers in downtown Tampa — the 32-story SkyPoint condominiumn tower and the 35-story built as condos but later converted to rental units afteer the housing market crashed.
SkyPoint has sold 341 of its 380 unitss since opening in 2007 with 17 sold this year according to Hillsborough County property The most recent sale came Thursday witha $303,000 unit SkyPoint LLC, the limited liability company linked to Novare-intowngroup, built the tower using a $64.1 million loan securee through Freemont Investment Loan of California in May 2005, according to propertuy records. SkyPoint received an additional $10.5 millio investment from Jamestown, a real estater investment and management companhin Atlanta, in March 2006. Element Properties LLC, the Novare-intowngroupo company that built Element, did it with an $84.3 millionj loan from Corus Bank inDecember 2006.
There has been no othed significant activity surroundingthe Novare-intowngrou p properties, outside of a sale June 19 of land wheree a parking lot sits just nortgh of SkyPoint to for $2.75 million. Novare-intowngrouo had purchased the land through its Tampa Ashley Blocik limited liability corporation in September 2006for $7.5 million from Teco Novare also has interest in other propertieas in the Tampa region. Much of it has not been used for residentia construction but instead is beingb used asparking lots. Greg principal for the Tampa-based intowngroup, was out of the country when reacherd Friday and asked to be contacted when he returns next week.
Novare has been hurt by the dramaticd decline in thecondo market, which has left the companyy unable to sell units at a according to documents obtained by reporters. The compan also has spent monet for future development on land and architectural plansthat “are worth substantially less, and in some worth nothing in a world wheres development is nearly impossible,” Novare’s Borders wrote in a lettere to investors.
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