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Finance for development near Dallas, Texas

Monday, December 18, 2017
Borrower   A developer of master-planned communities, primarily in Florida.
Loan   A $7,000,000 nine-month loan at 24%.
Collateral   A second lien on a 632-acre master-planned community with 1641 lots. The development features several recreation centers (including tennis courts and pools), a golf course developed by IRI Golf Management and parks linked by an extensive greenway system of trails and paths. In addition, 10 acres of the property were set aside for a school.
Guarantors   None - the borrower's other loan covenants forbade it to issue any further guarantees, and in our view the collateral was sufficient.
Purpose   The borrower needed cash in a hurry to meet payments on its senior loans. The shortage was caused by their failure to close a sale at the time they had planned.
Exit strategy   The borrower expected to repay the loan out of the proceeds of the sale of the project.
Outcome   The loan was repaid in full.




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