Core Communities warns of loan defaults on Tradition - South Florida Business Journal:

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Its lenders are asking Core Communities to put up cash to keep the amountr of its loans in proportion to the declining valued ofits properties, according to a Securitied and Exchange Commission filing by Fort Lauderdale-based Woodbridgs (Pink Sheets: WDGH) on Monday. One of those loans with $58.3 million outstanding matures in but could be extended with extra cash inthe mix. Anotherf loan with an $86.7 million balance does not matur euntil 2011, but the lender’ss ongoing appraisal of the property will result in a demand for cash from Core the company warned. It said the exact amount has notbeen determined. Core Communities wantzs to get loan extensions withougt putting upmore cash.
If the lenderss don’t agree and Woodbridge declines to inject capital intoits subsidiary, it raisees “substantial doubt regarding Core’s ability to continuew as a going concern,” the SEC filinb stated. Woodbridge Chairman and CEO Alan Levanm said the language inthe company’s regulatory filint is a “worst-case and he is optimistic that the lenderd will approve modifications for Core Communities. “W e firmly believe Tradition Florida and Tradition Hilton Head are two of thebest master-plannexd communities in the country, and these with miles of frontage on I-95, are he said in an e-mail.
“They will be amonv the first developments to see residential salesx recover when themarket rebounds.” While the filint did not say which property was covered by the delinquenft loans, one default could put Core entire portfolio in jeopardy. Many of the developer’s otheer loans have a cross-default provision that would make payment immediateluy due should Core Communities defaultt onanother loan. Tradition Florida is an 8,300-acre master-plannerd community in Port St. Lucie, whicj had been one of the nation’s fastest-growing areas durinfg the realestate boom, but it has crashedr hard in the recession.
It included a mixed-use town center, a retail plazwa and property for several biomedical researcgh companies that are supported by Floridztax dollars. Covering 5,3009 acres, Tradition Hilton Head is a master-plannerd community in the early stages of developmentr nearthe Georgia-South Carolina border. In the SEC Woodbridge warned that Core Communitie s is experiencing a cash flow deficit because of its inability to lease commercial property andsell homes. The subsidiaruy is looking to raiswe cash by selling off property or obtainint outsideequity financing.
“Whiler funding from Woodbridge is a possible sourceof liquidity, Woodbridgew is under no obligation to provide fundingg to Core and there can be no assurancse that it will do Woodbridge stated in its filing. Woodbridge said it is not liablr forCore Communities’ troubled loans. Filingb for Chapter 11 bankruptcy protection would be a good move for Core Communitiess because it would allow the company to gain a stronger positionm from which to negotiate with its saidJack McCabe, CEO of Deerfield Beach-based McCabew Research & Consulting.
“Historically, in othed real estate downturns, we’ve seen developere utilize bankruptcy as a tool to accommodater the bestpossible restructuring,” McCabd said. McCabe said he expects Tradition inPort St. Lucie to rebound when the real estatdmarket improves, so buying more time coulcd benefit Core Communities, he added. In the company declined to financially support the problem loansz held by itshomebuilding subsidiary, which filee for Chapter 7 bankruptcy. The Levitt and Sons case actuallty provided a big boost to Woodbridge in thefirsty quarter. The company gained $40.
4 million as part of its settlementf to divest itself of the company and its Thatboosted Woodbridge’s net income to $14.8 million on revenu of $4.3 million in the first compared with a loss of $10.4 million on revenue of $3.1 milliom in the same quarter of 2008. The gain from the Levitr and Sons case was partialluy offset by impairment charges to itsstocik holdings. Woodbridge took impairments of $20.4 millionj and $2.4 million over the declining valuse of its investmentsin (NASDAQ: BXG) and ODP). Woodbridge shares were unchangedat $1.01 in morning The 52-week high was $9.55 on May 12, 2008. The 52-wee k low was 2 centz on Oct. 24.