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Carl Nichols

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Reynolds Plantation Financial Issues
« on: February 08, 2011, 11:51:44 AM »
http://www.ajc.com/business/posh-reynolds-plantation-may-830738.html?sms_ss=email&at_xt=4d516a8677ae1c82%2C1

  Posh Reynolds Plantation may sell off golf courses

By Rachel Tobin and J. Scott Trubey


The Atlanta Journal-Constitution

10:13 a.m. Tuesday, February 8, 2011

The developers of the Reynolds Plantation, one of Georgia’s most exclusive enclaves of vacation homes and golf courses, have floated a plan to sell off key assets like golf courses, clubhouses and even swimming pools to pay off $45 million in debt to impatient lenders.

It’s another blow to luxury golf communities in Georgia, following the foreclosure of Country Club of the South's golf course and last year’s bankruptcy and sale of Sea Island Co.

The news about Reynolds Plantation came to light after a letter was sent to homeowners Thursday, detailing issues for the development that is about an hour and a half drive east of Atlanta on I-20 on Lake Oconee.

According to the letter, signed by Reynolds Plantation Chairman Mercer Reynolds III, a group of banks is demanding a hasty payment of $45 million by April. The payment was requested while the development company was negotiating renewal of a line of credit.

In the letter, Reynolds says he and his cousin, Jamie Reynolds, had “pledged a number of additional assets (totaling approximately $60 million) to the banks,” but the banks still want the large payment in two months. The cost of construction of the amenities being sold is about $136 million, the letter says.

The Reynolds empire at Lake Oconee covers a vast swath of the lake shore in Greene and Putnam counties. It includes three gated communities—Reynolds Plantation, The Landing and Great Waters— a golf academy, and six golf courses, with a seventh on the drawing board. There are around 2,000 dwellings between the three communities.

Bud Sanders, a Greene County commissioner whose district includes Reynolds Plantation, said the letters caught him by surprise.

He said he’s “very concerned” because it is a very large part of the tax base.

“They obviously are having some financial troubles,” he said. “If it turns out that they have to start reducing prices on their property that’s going to depress it throughout the neighborhood and throughout the county.”

Attempts Monday to reach Reynolds Plantation were unsucessful.

The letter says the line of credit was used by Reynolds Plantation, Linger Longer Development Co., and its affiliates to buy land for further development of the ritzy subdivisions and golf courses that are near the Ritz Carlton Lodge, a popular destination for Atlantans.

“Historically, acquiring land in the Lake Oconee area to ensure that Reynolds Plantation continued to grow has been a reliable business strategy,” Mercer Reynolds wrote. “However, with this downturn, we found ourselves in the position of having acquired more real estate, and debt, for Reynolds Plantation than is supported by recent demand.”

The letter says the company is pursuing three options for selling the assets: the property owners association, a smaller group of property owners, or an independent third party that has made an offer.

The letter emphasizes that no decision has been made on which way to go.

Other assets being sold include marina facilities, a cottage rental operation, the Lake Club, the Nature & Heritage Center, and several administration and service buildings.

The Jackson House, described on the Reynolds Plantation Web site as “the jewel” of the development which “sits majestically over the entrance to the community,” also is for sale. It was built in 1883, and is an example of Steamboat Gothic architecture, the site says.

The Reynolds family has owned land in the area, once known as Cracker’s Neck, since the 1920s when the family patriarch owned a hunting retreat known as “Linger Longer.”

In the 1980s, the family started aggressively developing sites for retirement and vacation homes. It started with Reynolds Plantation, and was followed by Great Waters, featuring an 18-hole Jack Nicklaus golf course in the 1990s.

In the 2000s, Reynolds bought Port Armor, a competing development and renamed it The Landing at Reynolds Plantation. Later, a 251-room posh Ritz-Carlton hotel with a spa and golf course opened. The hotel is not part of the potential sale.

Today, Reynolds Plantation encompasses more than 14,000 acres and 90 miles of shoreline on Lake Oconee.

The Reynolds influence has stretched far beyond Lake Oconee. Mercer Reynolds served as national finance chairman for President George W. Bush’s re-election bid in 2004, and served as U.S. ambassador to Switzerland and Liechtenstein.

Linger Longer, meanwhile, was the chosen developer for the rebirth of Jekyll Island. The company’s grand $352 million redevelopment plans were pared to $170 million and eventually shelved in 2009 when Linger Longer pulled out “due to the uncertainty of the economic environment.” A more modest plan with other developers is underway.

Reynolds companies also bought distressed properties in the past decade, including a golf development near Dahlonega renamed Achasta and a planned community near Blowing Rock, N.C.

But sales have been slow.

One concern for those around Lake Oconee is how the sale of the golf courses and other assets will affect home values there.

After high-volume sales through the mid-2000s, home sales plummeted. Financing for lot sales and even home construction became hard to find. Land values dipped.

Condos without golf or lake views start in the $300,000 range, climbing to near $1 million for glimpses of the water and greens. Lake lots can rise well above $1 million, with homes on the water going much higher.

The past year has shown some signs of improvement. Home sales have picked up and prices have stabilized.

“We’ve hit bottom and we’re on the upswing,” said Tom Martin, president and COO Coldwell Banker Lake Oconee Realty. “We see people back in the market looking for a purchase.”

Commissioner Sanders said the letter about the developers’ financial challenges is likely to “make people think twice,” before buying homes there.

Still, he expressed confidence in the developers. “Knowing the folks I do know out there with the organization, they’ve got a game plan, and I feel confident they will make it work.”


Find this article at:
http://www.ajc.com/business/posh-reynolds-plantation-may-830738.html
 

Mike Nuzzo

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Re: Reynolds Plantation Financial Issues
« Reply #1 on: February 08, 2011, 12:11:01 PM »
There sure is a lot of info about the development but not about the impatient lenders.
Thinking of Bob, Rihc, Bill, George, Neil, Dr. Childs, & Tiger.

Chris Johnston

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Re: Reynolds Plantation Financial Issues
« Reply #2 on: February 08, 2011, 12:37:51 PM »
This is an example of what I tried to point out last week - a truly great and "romantic" club.  Debt is a killer these days and if you are seriously considering becoming a member of a club, this is something you should know.  How much debt is there? Is it manageable? How will it be retired?  Lot sales?  Membership sales?  Hope? 

Members of most recently built clubs are both unsecured and behind large debt burdens.  The new reality is things have changed in golf.  Point is, the business is tough enough these days without large debt.


John Kavanaugh

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Re: Reynolds Plantation Financial Issues
« Reply #3 on: February 08, 2011, 12:47:32 PM »
Chris,

Joining a club is different than buying one.  I see joining a club much like falling in love, ask to many questions and it ain't gonna happen.
« Last Edit: February 08, 2011, 12:49:18 PM by John Kavanaugh »

jeffwarne

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Re: Reynolds Plantation Financial Issues
« Reply #4 on: February 08, 2011, 12:47:52 PM »
This is an example of what I tried to point out last week - a truly great and "romantic" club.  Debt is a killer these days and if you are seriously considering becoming a member of a club, this is something you should know.  How much debt is there? Is it manageable? How will it be retired?  Lot sales?  Membership sales?  Hope?  

Members of most recently built clubs are both unsecured and behind large debt burdens.  The new reality is things have changed in golf.  Point is, the business is tough enough these days without large debt.




I don't think anyone would consider reynolds a "romantic" club
"Let's slow the damned greens down a bit, not take the character out of them." Tom Doak
"Take their focus off the grass and put it squarely on interesting golf." Don Mahaffey

Jud_T

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Re: Reynolds Plantation Financial Issues
« Reply #5 on: February 08, 2011, 12:58:18 PM »
The finances of any club can be a dealbreaker in terms of joining, I don't care how storied a course.  We were looking at 2 clubs originally back in the day.  One was linked to a real estate development and had hit up charter members for a very large assessment but was a better course and closer to our home.  The other was solely owned by a guy worth hundreds of millions.  Guess which one we chose...
Golf is a game. We play it. Somewhere along the way we took the fun out of it and charged a premium to be punished.- - Ron Sirak

Carl Nichols

  • Karma: +0/-0
Re: Reynolds Plantation Financial Issues
« Reply #6 on: February 08, 2011, 01:20:06 PM »
This is an example of what I tried to point out last week - a truly great and "romantic" club.  Debt is a killer these days and if you are seriously considering becoming a member of a club, this is something you should know.  How much debt is there? Is it manageable? How will it be retired?  Lot sales?  Membership sales?  Hope?  

Members of most recently built clubs are both unsecured and behind large debt burdens.  The new reality is things have changed in golf.  Point is, the business is tough enough these days without large debt.




I don't think anyone would consider reynolds a "romantic" club

Or even a "club."  Except for one private course, it's more of a hybrid resort-residential community in the Pinehurst model.

Mac Plumart

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Re: Reynolds Plantation Financial Issues
« Reply #7 on: February 08, 2011, 03:10:42 PM »
It is funny/curious, how you guys latch on to how someone words something and completely ignore the point of the post.  Chirs' point is that a too much debt can kill a course/club/resort/whatever.  Here is, another, specific example.  And you nit-pick whether Reynolds Plantation is a club.  Well, it is.  There is a private club element to it...I know members and I've played the private course and spent time in the private clubhouse, and spent a lot of time in the private homes up there...as well as the resort and hotel.  Great place.  Up-scale, relaxing, fun, and, yes, it can be romantic...both in terms of lifestyle, golf, and whatever else you want to associate with romance.

Sportsman/Adventure loving golfer.

Mike_Young

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Re: Reynolds Plantation Financial Issues
« Reply #8 on: February 08, 2011, 04:04:43 PM »
This entire deal might get real interesting around 4/30/11 if they don't find a buyer.....they kept this silent as long as possible...these things can start a downward spiral quickly.....and I don't see a buyer....
"just standing on a corner in Winslow Arizona"

jeffwarne

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Re: Reynolds Plantation Financial Issues
« Reply #9 on: February 08, 2011, 04:17:22 PM »
It is funny/curious, how you guys latch on to how someone words something and completely ignore the point of the post.  Chirs' point is that a too much debt can kill a course/club/resort/whatever.  Here is, another, specific example.  And you nit-pick whether Reynolds Plantation is a club.  Well, it is.  There is a private club element to it...I know members and I've played the private course and spent time in the private clubhouse, and spent a lot of time in the private homes up there...as well as the resort and hotel.  Great place.  Up-scale, relaxing, fun, and, yes, it can be romantic...both in terms of lifestyle, golf, and whatever else you want to associate with romance.


[/quote

What was the point of the post anyway?
« Last Edit: February 08, 2011, 10:28:56 PM by jeffwarne »
"Let's slow the damned greens down a bit, not take the character out of them." Tom Doak
"Take their focus off the grass and put it squarely on interesting golf." Don Mahaffey

Mac Plumart

  • Karma: +0/-0
Re: Reynolds Plantation Financial Issues
« Reply #10 on: February 08, 2011, 04:29:15 PM »
Jeff...

Obviously, the answer is no.  Frankly, I didn't really read too much of the thread where Chris made that comment.  If memory serves me correctly, he said he should have written his thoughts more clearly regarding the "unlike my neighbors post"...but those were Chris' words and, like I said, I didn't read that thread too closely...so I can't really even form an opinion enough to form a guess on who he was talking about. 

I think the point of this thread, and Chris' comments on it, are that debt is a killer.  And people need to pay attention to it. 
Sportsman/Adventure loving golfer.

Chris Johnston

  • Karma: +0/-0
Re: Reynolds Plantation Financial Issues
« Reply #11 on: February 08, 2011, 07:10:46 PM »
JeffWarne - I'm glad you can devine my now well covered intentions despite my having explained enough exactly what I meant.  Let me devine myself that you must be a member of, or work at, a highly leveraged club.  If so, sorry for striking a nerve.  I wasn't referring to Reynolds in my post last week but it does offer support to the exact contention I made that there are many "romantic" clubs having a devil of a time due to overleverage.  You may disagree with the premise but you don't have to bang me personally.  Unless you have rose colored glasses, it is widely understood that clubs with tons of leverage these days are in trouble.  I didn't make it that way so don't shoot the messanger.

Mac - you are correct.  Debt (and over capacity) are cancers on the golf industry.  Ignoring this, or some blaming the messager, is silly.  Reynolds is not at all unique these days - there are the ones you know, and the ones you don't.  As a fan of Mercer and golf, I wish them the best in their efforts.  I'm glad we don't have a crippling debt load - it can't be much fun.

jeffwarne

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Re: Reynolds Plantation Financial Issues
« Reply #12 on: February 08, 2011, 07:44:57 PM »


Chris,

Debt is a killer-glad you're not dealing with it.
You didn't strike a nerve as no club I'm associated with has any debt.
« Last Edit: February 08, 2011, 10:32:17 PM by jeffwarne »
"Let's slow the damned greens down a bit, not take the character out of them." Tom Doak
"Take their focus off the grass and put it squarely on interesting golf." Don Mahaffey

Don_Mahaffey

Re: Reynolds Plantation Financial Issues
« Reply #13 on: February 08, 2011, 08:46:33 PM »
Chris,
It is interesting for a club like DR to have zero debt so early in it's existence. Did the club have benevolent investors who put money up with no real desire for a return? Did you sell out all the memberships needed so you never had to borrow? Did the original developer meet all his obligations before selling to your group? Please tell the rest of us how a club so young can be debt free. It may be a great case study for future developments. What did DR do differently then its neighbors?
« Last Edit: February 08, 2011, 10:16:38 PM by Don_Mahaffey »

Tiger_Bernhardt

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Re: Reynolds Plantation Financial Issues
« Reply #14 on: February 08, 2011, 11:02:22 PM »
I guess he thinks this is Obama's fault. lol He wore his Bushieness like a bullet proof badge of honor. I am very sorry for the homeowners.

Jim Colton

Re: Reynolds Plantation Financial Issues
« Reply #15 on: February 09, 2011, 11:08:56 PM »
JeffWarne - I'm glad you can devine my now well covered intentions despite my having explained enough exactly what I meant.  Let me devine myself that you must be a member of, or work at, a highly leveraged club.  If so, sorry for striking a nerve.  I wasn't referring to Reynolds in my post last week but it does offer support to the exact contention I made that there are many "romantic" clubs having a devil of a time due to overleverage.  You may disagree with the premise but you don't have to bang me personally.  Unless you have rose colored glasses, it is widely understood that clubs with tons of leverage these days are in trouble.  I didn't make it that way so don't shoot the messanger.

Mac - you are correct.  Debt (and over capacity) are cancers on the golf industry.  Ignoring this, or some blaming the messager, is silly.  Reynolds is not at all unique these days - there are the ones you know, and the ones you don't.  As a fan of Mercer and golf, I wish them the best in their efforts.  I'm glad we don't have a crippling debt load - it can't be much fun.

Chris,

I know Dismal had very little dirt moved in it's first iteration. Is this why the club was able to make it with little to no debt? Of course, I can't imagine Jack's services come very cheap.

Chris Johnston

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Re: Reynolds Plantation Financial Issues
« Reply #16 on: February 09, 2011, 11:48:25 PM »
Jim

Little dirt was moved and dirt out here is $300 per acre, not $300,000 or $3,000,000.  That also kept costs down.  We are not the developer and acquired a club with little debt -  this is what we will see in the future - entities buying clubs with debt left at the closing table.  There is low likelihood that Dismal would have suceeded with a large dose of debt and members generally don't favor low odds. The debt model simply doesn't work anymore.

Regardless how it's done, I believe the clubs that will succeed must find ways to eliminate or reduce debt.  Economic reality demands this.  Maybe this is the new but discomforting normal?

David Lott

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Re: Reynolds Plantation Financial Issues
« Reply #17 on: February 16, 2011, 12:24:14 AM »
"Regardless how it's done, I believe the clubs that will succeed must find ways to eliminate or reduce debt."

The bankruptcy process is very effective at eliminating debt. Wealth also.
David Lott

Mike Hendren

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Re: Reynolds Plantation Financial Issues
« Reply #18 on: February 16, 2011, 12:35:55 PM »
This story might not be a juicy as one thinks.  $45 million is chump change in the scheme of things.  I hear that the money was owed to a smaller bank (or perhaps syndicate of banks) that failed and a large regional bank (which I'm unwilling to name) took over the bank and assumed the loan.  At this point it's all about posturing - the new bank wants to get paid and the borrower wants a little time.  This scenario is being played out all over the country and is simply business as usual in the current environment.  It's more of a bank issue than it is a residential/golf development issue.   So I'm told.  Nothing a little OPM (Other People's Money) can't solve.

Mike
« Last Edit: February 16, 2011, 01:06:14 PM by Michael_Hendren »
Two Corinthians walk into a bar ....

Lou_Duran

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Re: Reynolds Plantation Financial Issues
« Reply #19 on: February 16, 2011, 01:11:50 PM »
This story might not be a juicy as one thinks.  $45 million is chump change in the scheme of things.  I hear that the money was owed to a smaller bank (or perhaps syndicate of banks) that failed and a large regional bank (which I'm unwilling to name) took over the bank and assumed the loan.  At this point it's all about posturing - the new bank wants to get paid and the borrower wants a little time.  This scenario is being played out all over the country and is simply business as usual in the current environment.  It's more of a bank issue than it is a residential/golf development issue.   So I'm told.

Mike

Mike is probably right; most financial institutions don't want to add to their REO portfolios, and I suspect that the owners have quite a bit of equity left in the project. However, while visiting Houson over a year ago, the GM at one of the top clubs there asked what was going on with the Four Seasons-Las Colinas posted foreclosure and I opined as Mike has.  Not long afterwards, after having spent over $10 Million in the latest round of improvements, the owner let the foreclosure take place.  I don't know the circumstances, but sunk costs are just that; the question becomes debt, carrying costs, operating income, and their view of future valuations.  It takes great strength or weakness to walk away form $100 Million+ properties. 

Tom_Doak

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Re: Reynolds Plantation Financial Issues
« Reply #20 on: February 16, 2011, 07:37:52 PM »
Michael:

I hope you're right that this is not a crisis situation and that it can be resolved.  But there have been a lot of sudden sales recently at big golf properties ... Bonita Bay and Desert Mountain leap to mind.  And $45 million isn't chump change for most people in the golf / real estate business these days.  Trump probably wouldn't pay that much for all six courses, unless they would change the name of the Lake.

Kye Goalby

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Re: Reynolds Plantation Financial Issues
« Reply #21 on: February 16, 2011, 08:03:22 PM »
"Trump probably wouldn't pay that much for all six courses, unless they would change the name of the Lake."

Tom,

Thats funny!  I imagine you could not type that without a bit of a grin sneaking out
« Last Edit: February 16, 2011, 08:05:03 PM by kyegoalby »

Malcolm Mckinnon

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Re: Reynolds Plantation Financial Issues
« Reply #22 on: February 16, 2011, 08:38:40 PM »
Mike,

If Reynolds is just routinely renegotiating their line with the Bank it seems that they could have refrained from the discussion around selling off of Golf course, Swim club, and other assets to raise cash.

If they were just planning to refinance amongst a bunch of other banks all lining up for their business or don't even need the Credit line it seems like dismal PR on their part to have the Atlanta Journal Constitution print the story that they did.

I'll bet their current home owners are not feeling the warm and fuzzies right now.

Mike Hendren

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Re: Reynolds Plantation Financial Issues
« Reply #23 on: February 17, 2011, 10:54:39 AM »
Deleted.  I know little to nothing about this situation and my previous comments were pure conjecture.

Bogey
« Last Edit: February 17, 2011, 11:00:29 AM by Michael_Hendren »
Two Corinthians walk into a bar ....

Mike_Young

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Re: Reynolds Plantation Financial Issues
« Reply #24 on: March 30, 2011, 09:47:40 PM »
This was some interesting and long reading I got today...

http://reynoldsplantationblog.com/?paged=2

sort of shows what is happening now across the country.....outcome will be interesting to follow
"just standing on a corner in Winslow Arizona"

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