Condo developer facing mountain of debt - Atlanta Business Chronicle:

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This comes as its auditorw questionthe company’s “ability to continue as a goin g concern,” according to documents obtained by Atlanta Businesas Chronicle’s sister publication, the Nashville Business Novare faces $280 million in loan maturities in 2009 and anotherd $320 million in 2010. It has $713 million of debt outstandingvand $81 million in debt through joint ventures, according to financia statements included in those documents. Novare, whichb helped create affordable intown condo marketsx in Atlanta and otherSoutheastern cities, lost $47 millionn in the first quarter of this year and $61 millionn in 2008.
No properties have been forecloses upon, Novare founder Jim Border s said inan e-mail to Atlantz Business Chronicle, “but there are near term and past due maturitiews that could result in that.” Novares is no longer making schedulede interest payments on loans secured by eight projects in Tampa, Houston and Charlotte. Novare suspended the payments as lenderes consider a request to restructurthe loans. Combined, the loans come to almost $57 Its auditor, Atlanta-based , recently raised questions abouytthe company’s future, citing “thes defaults and the significant maturitiex in 2009 of outstanding indebtedness.
” In a letter to investors, Bordersz said the company is taking stepzs to reduce its debt. “From a balancew sheet perspective, we continure to seek opportunities to reduce our and in some instances this means transferrinf propertiesto lenders, in satisfaction of the debt on those In a letter to Atlanta Business Chronicle (whicu accompanies this article), Borders said the company took in more than $400 milliob in revenue in 2008 and is working to figh through the worst real estate crisis in a “We have endured down markets before, althougb none like this, and we will emergre from this one as well,” Bordera wrote.
“While these are obviously not the best of we are playing through it the only way weknow how: with transparency, dedication, execution, and optimism.” Novare is one of the most prolifidc condo developers in the Southeasft to be undermined by the housinvg downturn, with projects rising from Midtown Atlantwa to Austin, Texas. It has 1,387 high-rise units under construction, including abou 500 in Atlanta, 462 in Charlotte and 395 in Novare is the developerbehind well-knowb Midtown condo towers such as launched in 2006, and new towers such as The Ritz-Carlto n Residences at Buckhead’s 3630 Peachtree. Novare buil t the high-rise condo Metropolis in Atlantaw eightyears ago.
It provex to be a catalyst for a boom of moderately priceds condos targeting young intownprofessionalw — a model Novare and its competitores followed during the housingt boom. But, during the past 18 the dramatic decline ofthe U.S. housing markeft has taken its tollon Novare. The company suffered a $26.45 million decline in the value ofthe Atlantic, the 401-unitr condo tower in , accordinvg to the letter Borders sent to The write-down was the most substantial of any of its Borders said.
Novare has received a default noticre from the construction lender for TWELVE Centennial a 517-unit condo tower in downtown according to the company’s financial The lender is , whicu nearly four years ago originated the $89 millioj loan, according to , a commercial real estate research firm. Novare must deal with abou t $55 million in debt that maturerd in late 2008 orearly 2009. It has forbearancde agreements withseveral lenders. Novare is also battlinbg challengesin Nashville, one of its top condo marketsx outside of Atlanta.