| Description of Prop: |
Lake Travis, Austin, Texas. Lake Estates/Golf Course Development on Lake Travis, Austin, Texas.
5/02 Partnership holds second lien to 364 Acres. The golf course comprising of 206 Acres was released by the partnership (as a part of its collateral) so that a separate loan could be made to complete the course and to build the clubhouse. On June 1, 2002, the borrower is to pay all arrears interest payments. The general partner feels that the golf course amenity will greatly enhance the appeal and value of the property, and lots are much more desirable. The note was reduced from its original interest rate of 15% to 12% per annum. Paydowns per lot, the partnership will receive 20% of the proceeds, and it is estimated that after 50% of the development lots being sold, that the partnership will be paid back. This may take 2 years.
5/03 The borrower claims to have made tremendous progress on the subdivision and the golf course. He anticipates opening the golf course in October of this year. He anticipates completion of the subdivision by the end of August. He has currently $6,500,000.00 dollars of lot sales under contract and are close to signing an additional $2,000,000.00 with current prospects. These sales will help get him current on interest payments and start to reduce the principle of our note.
8/3/04 Unfortunately, Salem has taken a turn for the worst. Last year Steve Morse, the borrower put the property secured by Salem’s $4,000,000 2nd lien, into bankruptcy. We were hopeful that Steve would come up with a plan to bring the property out of bankruptcy. Last week at his final hearing, the Judge turned down his plan for reorganization and tomorrow the two first lien holders will foreclose on the property and wipe out our claim. We engaged Fulbright and Jaworski to defend our position but it appears that we will lose this battle.
We have been seeking investors to take out the first lien holders. There are value issues with their loans and I believe they will sell their notes at significant discount. We am working with three different groups to purchase the property. If we are successful, there will be a backend position for Salem. This is a long shot, but the property has merit and there are many interested parties in purchasing the property. The notes have a face value of over $30,000,000. Due to our knowledge and having the relationship with the lenders, there is a chance that we will be successful in negotiating the sale and getting a position for Salem.
12/10/04 The partnership was not able to obtain a deal with a new developer. The property was foreclosed to the first lien holder, which our partnership was the second lienholder; therefore, we were wiped out of our security interest. The partnership was able early on to recover approximately 30% of principal in a principal reduction payment. However, no other assets are available, other than the guarantor's guarantee, which we believe that he will or has filed bankruptcy. No additional recover is expected.
1/15/05 The general partner believes that there will be no other recovery from this partnership. The amount collected is approximately 43% return of the principal loan amount.
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