Friday, September 18, 2009
Sunset Cay properties sold in foreclosure auction
Nine homes near Smith Mountain Lake were sold after the developer defaulted on a loan.
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HUDDLESTON -- The remnants of a failed scheme to build up to 1,500 homes near Smith Mountain Lake were auctioned off Thursday with houses initially priced at $450,000 and up selling for an average of about $212,800.
Nine new homes -- the only ones built as part of the planned Sunset Cay development in Bedford County -- were sold to the highest bidders in a foreclosure auction made necessary when the developer defaulted on a loan. One of the custom homes, which sat empty for more than a year, sold for as little as $155,000. The highest price paid was $260,000.
Altogether the homes sold for $1.91 million, plus 5 percent in commissions to be paid by the buyers. The auction was held at The Pointe Conference Center at Mariners Landing.
"It's not bad, for this market," said Rick Read of Torrence, Read & Forehand Auctions of Lynchburg, which conducted the auction on behalf of StellarOne bank. StellarOne ordered the auction of the property it had repossessed from Smith Mountain Lake Partners in hopes of recovering some of the $6.1 million a court said it was due.
But at Thursday's auction, bids for other, undeveloped parcels of Sunset Cay land were so low that StellarOne bought the property itself for $800,000. That property is composed of 22 residential lots, a 27-acre residential parcel and two commercial lots.
When it announced the Sunset Cay project in 2006, SML Partners had envisioned 132 homes and some commercial development along Hendricks Store Road in Moneta. The next year the company dramatically expanded its plan to call for a mixed development of nearly 1,500 homes, cottages, town houses and condominiums around a golf course, with restaurants and 190,000 square feet in retail space.
But with no buyers for its first nine homes, SML Partners defaulted on a loan and declared bankruptcy in February. Though the company's bankruptcy filing was later dismissed, an option to buy an additional 400 acres of farmland needed for the project was never executed.
StellarOne, meanwhile, said this summer that borrowers were behind on repayments on $25.3 million worth of loans associated with development or construction at or near Smith Mountain Lake.
The lake's real estate market of second homes, expensive luxury properties and retirement havens peaked in 2005 and has gone through a steep decline since the real estate bubble burst nationally. Sales of waterfront homes and those with boating access to the lake declined 12 percent through the first seven months of the year, compared with the same period in 2008. Sales gained only slightly in August.
