Tuesday, August 12, 2008
Bankrupt developers at lake strike deal with bank
A spokesman for Bridgewater Pointe, a luxury high-rise, said a judge will rule on the matter.
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Developers who defaulted on a $20 million loan used to build a luxury condominium tower at Smith Mountain Lake have struck a deal to trade the property with their bank for a release from debt, a lawyer in the case said.
Chip Magee, representing the developers of Bridgewater Pointe, said a bankruptcy judge is scheduled to take up the matter -- and perhaps sign off on the contemplated transfer -- on or before Aug. 29.
Bridgewater Pointe has been sitting vacant for six months. The elegant high-rise on Virginia 122 by Hales Ford Bridge is done except for a planned pool and clubhouse, landscaping and minor project-completion tasks. Would-be buyers are flocking to see its 48 units, which are priced from $428,000 to $799,000.
But nobody has bought one.
Technically, all matters are in control of the U.S. Bankruptcy Court for Western Virginia -- for now. But that restriction could soon end.
The developers, doing business as Bridgewater Pointe Partners LLC, encountered various delays during several years of construction. By the time the project was done late last winter, the market for high-end condos had softened in the real estate market downturn.
The company defaulted on its construction loan, and its lender, BB&T Corp., scheduled a foreclosure auction in April. Hours before the scheduled auction, the developers put their company in bankruptcy.
Magee said Monday the limited liability company and BB&T have a tentative deal to end the matter by putting the real estate in the bank's hands.
"The bank is willing to take the property back," Magee said.
BB&T, which is owed about $21.5 million, is also open to negotiating with a qualified buyer before Aug. 29, Magee said.
If the bank ends up with the tower, it is likely to sell the project as is or finish remaining construction work and then sell it, Magee said. As are many banks, BB&T is already struggling with large amounts of foreclosed and reclaimed real estate stemming from unpaid loans, according to its latest quarterly financial filing.
BB&T set aside $330 million during the second quarter as a buffer against bad loans, nearly four times the amount a year earlier. The bank still made $428 million over the three-month period.
The bank had no immediate comment on Bridgewater Pointe.
Tim Basham, a lake real estate broker, is one of what Magee said were nearly 20 original investors in the project who put up about $2.5 million toward construction-related costs to jump-start the project before the loan. Basham said that the original financial promise of the project for those investors appears lost.
"I think everybody's going to lose their original investment," Basham said.
That said, visitors have been flocking to see Bridgewater Pointe all summer. After the court case ends, Basham said he expects would-be buyers will sign the first purchase contracts.
On Sunday, "there were 70 couples that went through there," Basham said. "We're moving forward right now."
