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Monday, October 20, 2008

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With Some Big Builders in Bankruptcy, Is it Time for the State's Land Conservancies to Buy Choice Parcels?

Here's a good report from a builder's and mortgage blog. Geez, it would be GREAT if the conservancies could come up with the funds to buy that Stevenson Ranch parcel and Newhall Ranch. We will never have an opportunity like this again. I hope they have made contact with Barclays Bank Representatives. The bank may be very willing to relieve itself of this outlying raw land and Stevenson Ranch with no water is virtually undevelopable. There are many graded lots in Santa Clarita much closer in that will undoubtedly take care of the market for many years.

from: Lynne Plambeck, President, Santa Clarita Organization for Planning and the Environment

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LandSource's DIP Lender Files Liquidating Ch. 11 Plan
Posted: Wed Oct 15, 2008 4:14 am

http://implode-explode.com/forum/viewtopic.php?t=85640&sid=919f3c1a4f63f4c39a585fa31a86100b

LandSource, the raw land and lot holding company owned by CALPERS and Lennar, has been a Chapter 11 debtor since June 2008. At the time of its bankruptcy filing, LandSource owed nearly $900 Million on a syndicated mortgage loan managed by Barclays Bank. Barclays and some of its syndicate members rolled up the loan into a $1+ Billion DIP loan due in June 2009.

On 10/13/08 Barclays Bank, as lead lender for the participants in the DIP loan, filed a proposed Chapter 11 Plan of Reorganization for LandSource. It is a liquidating plan, as was predicted on the record, in the Bankruptcy Court, by counsel for the Committee of Unsecured Creditors when the terms of the DIP loan were argued.

In the Liquidating Plan, Barclays Bank proposes that a Plan Administrator be appointed, who would conduct an auction of all of LandSource's assets 120 days after the Court approved the Liquidating Plan. Barclays reserves the right to credit bid for all or part of the debtor's assets. Barclays proposes that the Plan Administrator then sell any assets remaining after the auction in the ordinary course.

So far, neither the debtor nor the Committee of Unsecured Creditors have filed a competing plan. It would be tough to draft a credible competing plan, without Barclays and its participants cooperation, given the need to find a source to refinance the $1+ Billion DIP loan due in June 2009.

At the height of the real estate boom, LandSource's real estate was valued at $1.8 Billion. In open bankruptcy court, various parties have alleged that same real estate is now valued at $750 Million.

Among the real estate proposed to be auctioned:

--Newhall Land & Farming's remaining residential and commercial land in Valencia, California
--A brand new TPC golf course in Valencia, California
--Newhall Land & Farming's farm land in California's Central Valley and Ventura County
--Newhall Land & Farming's Newhall Ranch, which has conceptual planning approvals but no approved plat maps, no Army Corps permits and no California Fish & Game permits
--A huge, mountainous tract constituting the remainder of Lennar's Stevenson Ranch project, which has no water entitlements
--A high rise apartment building under construction in Marina del Rey, California
--The massive Bressi Ranch in San Diego County, California
--A large ranch in Moorpark, California
--Lennar's Mare Island military base redevelopment project on San Francisco Bay, a project with significant hazardous materials contamination yet to be remediated
--Land in the Friendswood area of Houston
--Miscellaneous land in Las Vegas
--Miscellaneous land in several states formerly owned by MW Housing Partners III, a CALPERS investment vehicle designed as a "land bank" for Lennar, before the LandSource venture between CALPERS and Lennar was created

Barclays Bank cannot expect that there will be any cash buyers willing to pay a reasonable price for these huge pieces of real estate at auctions held in 2009 by a Chapter 11 Plan Administrator.

Title to the properties will undoubtedly end up in an entity created by Barclays Bank and its loan participants....unless the Treasury wants to spend $750 Million in TARP funds to acquire this "prime" development land.

Barclays Bank's plan to auction these vast tracts of land brings to the forefront the question of what will happen to the hundreds of thousands of residential lots throughout the country which exist on paper, or in partially developed state, or are completed and weed covered.

The business of "land development" for massive housing tracts built by national homebuilders will not recover for years and years and years.

_________________
Aristotle

As Yogi Berra said "It's like deja vu all over again.

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