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Laurelmor deadline is missed
Lenders had agreed to 30-day delay on foreclosure at resort
Journal Map by Richard Boyd II
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Published: August 2, 2008
BOONE - A deadline has expired that forestalled foreclosure on Laurelmor, a 6,000-acre golf resort in Watauga and Wilkes counties, but developers are continuing to negotiate with lenders.
Lenders led by Credit Suisse had agreed to delay foreclosure for 30 days after development companies affiliated with Bobby Ginn missed principal and interest payments on a $675 million loan for Laurelmor and three other resort communities due June 30.
"Although negotiations with the lending group have been ongoing and are continuing, our agreement did expire" Thursday, Robert Gidel, the president of Ginn Clubs & Resorts, said in a statement released yesterday.
"Negotiations for a resolution are continuing, and at this time, we remain optimistic that this credit facility will be restructured in a manner beneficial to all parties," he said. A credit facility is a type of loan.
The lack of a loan agreement means that the Ginn companies "will have to make difficult decisions relating to its management and oversight of these four properties," Gidel said. The resorts are Laurelmor; Tesoro, in Port St. Lucie, Fla.; Quail West, near Naples, Fla.; and Ginn sur Mer in the Bahamas.
Gidel said that the real-estate downturn will eventually pass, "and in the interim, we intend to do whatever is necessary to position the properties and developments that we manage to survive this period and be ready for growth when the market improves."
Ginn officials declined an interview request. In an interview in June, company officials said that they had sold about 200 lots at Laurelmor, not as many as they had hoped. At a sales launch in 2006, company officials said they had sold 240 lots for $150 million. But many of the people who signed sales contracts did not follow through and close on the properties.
The two companies that have the financial agreements involving Laurelmor are Ginn LA CS Borrower LLC and Ginn-LA Conduit Lender Inc.
The financial-research and rating firm Standard & Poor's downgraded the two companies to a D credit rating. That D stands for default, explained a spokesman for Standard & Poor's, Ed Sweeney, and that's where things still stand.
"If they are negotiating something, we would look at that and potentially change the rating," Sweeney said yesterday.
Bobby Ginn made a big name for himself in Hilton Head, S.C., where his spectacular crash as a developer made headlines in the 1980s and inspired bumper stickers that read, "Honk if Bobby owes you."
But he moved to Florida and rebuilt his career, becoming one of the top golf-resort developers in the United States.
The plans for Laurelmor would make it the largest and most expensive resort in Northwest North Carolina, if it comes to fruition.
Ginn is facing cash-flow problems now and dealing with a number of lawsuits.
Toby Tobin, a real-estate agent in Palm Coast, Fla., who operates the real-estate news Web site www.gotoby.com, listened in Wednesday to a conference call as Bobby Ginn talked to owners in Ginn's Hammock Beach Club properties in Florida.
According to Tobin, Ginn told them that this is perhaps the worst real-estate downturn he has seen, but that the company takes a long view and believes that properties with highly developed amenities always reward the investor.
But some land speculators who invested in Florida developments, hoping to buy, then sell for a quick profit, got badly burned in the market downturn.
One lot at The Conservatory at Hammock Beach, in Palm Coast, was bought for $469,900 in 2005. It went into foreclosure and sold last month for $92,500. Another lot there was bought from Ginn for $339,000 and sold for $85,000 last month.
Tobin said that those numbers don't necessarily reflect true market rates, because the lots in the resort were bought almost entirely by speculators and became bank-owned once the bubble burst.
It's too early to tell what will happen to Laurelmor or the value of lots there.
Ginn creates separate companies for each resort so that financial problems at one won't drag down the others.
This week, Ginn Resorts held three days of workshops in Charleston, S.C., getting public input on plans to develop a hotel, marina and homes on a 200-acre site on the Cooper River next to the Ravenel Bridge. The land was once used as a landfill and the company has spent $5 million hauling in fill to better cover the site.
■ Monte Mitchell can be reached in Wilkesboro at 336-667-5691 or at mmitchell@wsjournal.com.
■ The Associated Press contributed to this report.
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