Palm Coast, Florida – August 18, 2008 – Luxury properties are not immune from the real estate market's decline. Owners of a lot in Tesoro Preserve, a Ginn Company development in Port St. Lucie, Florida have decided to get out of their investment. 183 SE Via Sangro will be sold on-site at 6 pm Tuesday, August 19, 2008 (brochure). Originally purchased for $245,150, the lot will go to the highest bidder, regardless of the bid price. A recent reserve auction of Tesoro homes and lots was not a success. Sellers accepted none of the winning bids. An auction of Ginn home sites in Palm Coast last year was halted after the first two "no reserve" lots went for disappointing prices (story).
Tesoro is often referred to as Port St. Lucie's most upscale community. It boasts an Arnold Palmer Signature golf course and a luxurious 100,000 square foot plus clubhouse. As In other Ginn communities, buyers bought at the top of the market. Property values have declined and many owners are upside down with their lenders.
The Ginn Company has its own financial problems. Tesoro, along with three other Ginn developments (Quail West in Naples, Ginn sur Mer in the Bahamas, and Lourelmor near Boone, NC.) are subject to a Credit Suisse first and second lien debt, has been in default since July 1, 2008. The total debt is $675 million. Ginn reportedly still owns about 600 home sites in Tesoro.
In a statement issued August 1, 2008, Ginn president, Robert Gidel stated, "Although negotiations with the lending group have been ongoing and are continuing, our agreement (30-day forbearance) did expire 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."
"We want you to know that throughout the negotiation with the lending consortium, our primary focus has been on ensuring that our members and property owners are taken care of during, and after, this period. However, the lack of an agreement between the Borrowers and the lenders means that the Borrowers will have to make difficult decisions relating to its management and oversight of these four properties."
"The Borrower may have to discontinue the payment of certain dues and POA assessments on the lots that they own, which will put stress on the operations of the Clubs at Tesoro and Quail West."
"Regardless, as the current managers of the projects, we will do everything possible to provide for the orderly transition of these assets for the benefit of the Members, lot owners, and lenders."
Stressing that Ginn developments are financially separated, Gidel added, "All of the remaining communities and development projects that The Ginn Companies, LLC, manage are separately owned and funded by the partnerships and LLC’s that own them. It is very important to understand that these projects have no financial relationship with those properties secured by the Credit Suisse loan, and therefore, this event will not cause any change in the direction or management of these properties." Ginn has several developments in Palm Coast, FL that are not affected.
There have been no further communications.