Condo developer facing mountain of debt - Atlanta Business Chronicle:

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million development loan for Nashville developerTony Giarratana’ proposed 50-story Signature Tower in downtow n has been in default since February, and remains in default aftefr coming due at the end of April, according to a lette r sent to investors in Novare Group. One of the biggesft hurdles the company facesw isa $50 million credit loan and credit line with an affiliatw of Novare was informed by the lendedr on May 21, 2008, that it had violated a loan according to the financial statementsx obtained by the Nashville Business Journal.
Novare has not made the requirex monthly interest payments on thecredit loan/line, whichb includes a $20 million term loan and a $30 million revolvinf line of credit, since January. Novare is engaged in talks with the lende to restructurethe debt. Defaulting on the credit line could resulf in thelender “foreclosing on the company’s equity interesgt in a number of its assets,” accordingg to the financial statements. “These actions coul have a material advers e effect onthe company’s financial condition and its abilithy to continue to operate,” the statements said.
In his lettetr to investors, Borders said the company has been unabl e to make a profit on the sale of its outside of the highlydesirable Austin, market. “Put simply, outside of Austin, we are only able to sell [condos] if we do so at a pricee that is less than our The combination of construction pricing from a very healtht market two to four years ago when we startef ourexisting projects, and consumer demandc in a very weak market today, has caused this Borders goes on to say, “Inn any business, the key is to be able to sell for more than We are unable to do that now, and that has causerd a dramatic decline in our value.
” Novare aims to restructurew its balance sheet without resorting to bankruptcy, Borderxs told Atlanta Business Chronicle. “While this is not a markety that is easyto predict, and in fact has as one of its key characteristicxs unpredictability, we are focused on our service related businessesx such as property, condominium and project events, and realty,” Borders “We are also highly focusefd on looking for the next opportunity, and in a worlsd where private capital is at a premium, we believd it either needs to be dependenyt on government sponsored capital or simplh capital light.
In the meantime, we have many obligations to and it could take a whilre to workthrough those.”