| Description of Prop: |
Residential lot development, Montgomery County, Texas; lots being sold. Has 164 lots, and a 9-hole Gary Player Signature golf course. Will build an additional 9-holes, and a clubhouse.
2/1/03 Lot sales are slow. The borrower is keeping up with interest payments; however, there is only a small amount of principal reduction. The note terms on 5/1/03, unless 22% of the loan principal is paid. The borrower is not on schedule to renew the note under these conditions.
6/17 The partnership has received an offer from the borrower to settle the loan in the amount of $5,000,000. The principal balance of the loan is approximately $5.78MM. The borrower has made payments since the L&W bankruptcy (Oct '01) in the amount of $129,417 in principal, and $988,432 in interest, totaling $1,117,849.
The borrower has provided the partnership with a copy of the terms sheet from his new lender. The borrower is contemplating entering into a new loan with Old Standard Life. The interest rate is 13% apr, 4% origination fee, and a $2MM exit fee. The loan could close in the next 60-90 days.
Currently, the partnership's note term has expired (5/30/03), and the borrower is in default. The borrower has continued to make interest payments, with some amounts going to principal. The problem with this loan is that the borrower / developer has not been able to sell lots fast enough to pay the interest when due and pay any significant amount of principal. Every time there is a sale of a lot, interest is paid, but collateral is also lost.
6/7/03 The borrower has alternative funding to take out the partnership, if the partnership agrees to a discount of principal. The discount is approximately $800,000 reducing the debt from $5.8MM to $5.0MM. The partnership recently agreed to the proposal and Old Standard is the new lender that has proposed the takeover. We expect this transaction to take place in the next 60 days.
9/22/03 The borrower claims that the loan to take out the partnership should be able to close the week of 9/22.
11/1/03 The borrower has made a final payment of principal on the note.
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