Credit Suisse – Ginn and Other Luxury Resort Loans Default
Bloomberg.com calls Credit Suisse loan to Ginn-LA the boldest of all its resort loans. It included a planned $333 million distribution to Ginn-LA (return on capital) from proceeds of loan.
Palm Coast, Florida – March 6, 2009 – Credit Suisse loaned millions to resort developers, collected huge fees, and then sold the debt to syndicated investors. The investors put them into mutual funds or collateralized-loan obligations (CLOs). A recent GoToby.com article Bankrupt Yellowstone Club Creditors Seek Suit Against Credit Suisse covered details of a $375 million loan to the Yellowstone Club which ended in bankruptcy and a lawsuit. An excellent Bloomberg.com story Credit Suisse Resort Loans Default From Beverly Hills to Idaho details other Credit Suisse loans, including the $675 million loan to Bobby Ginn and his financial partner, Lubert Adler (Ginn-LA). Bloomberg.com calls the Ginn loan Credit Suisse’s "boldest move."
The list of Credit Suisse loan clients is impressive as are the sizes of the loans:
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$675 million went to Ginn, collateralized with properties in five resort communities; Laurelmor in North Carolina, Hammock Beach, Quail West, and Tesoro in Florida, and Ginn sur Mer in the Bahamas. Hammock Beach was subsequently removed from the collateral list. A June 2008 default resulted in two bankruptcies (Quail West and Tesoro) and a forced sale of Laurelmor in December 2008.
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$375 million went to the Yellowstone Club, a private Montana golf and ski resort which boasts Microsoft founder Bill Gates among its members. The club declared bankruptcy in November 2008.
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$540 million went to the Lake Las Vegas resort in Nevada. It went bankrupt in July 2008.
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$275 million to Promontory, a Utah ski resort; bankrupted in March 2008.
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$400 million was lent to Turtle Bay Resort in Hawaii; defaulted in December 2007.
In the Yellowstone Club deal, owners Tim and Edra Blixseth personally received $209 million of the loan proceeds "for purposes unrelated" to the Yellowstone development. Likewise, Ginn and his partner planned to take a $333 million distribution (return on capital) from the proceeds of their loan according to Standard & Poor’s, the credit rating company.
Investors caught up in the loan deals include Morgan Stanley’s Van Kampen Funds, Babson Capital Management LLC, and the Bill and Melinda Gates Foundation.
The Bloomberg.com article closes with, "Real estate and anything associated with it looked good to just about everyone in 2006. Credit Suisse earned fees making loans, investors earned high yields on the CLOs and project developers got financing. Some, like Blixseth and Ginn, even got cash back. Now, the only profits from Credit Suisse’s more than $3 billion in resort loans are going to bankruptcy lawyers."
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Old News
Toby,
when are you going to actually start doing some original work instead of publishing old news?
Definately new news!!
Toby,
The cash back is huge news. I would imagine that it was disclosed in all of the legal documents related the to the loans but if not, that would certainly put him away for a lifetime. I’m sure he was smart enough to make sure the docs reflected the equity draw.
It is pretty darn amazing though that in those days loans were being made with the full intention of the developer pulling nearly 50% out for personal use. That is more than doubling the exposure for the lender without the additional collateral. Amazing.
mikey
Toby, I think you do a great job. Too bad Mikey is so lazy he can’t his own web site up and running. Keep up the good work.
Ginn Company
Rumor has it that the whole company is going to be sold?
Look at other properties and staff being let go.
Look and dig deeply and you will get answers
Reply to Mike
The Bloomberg.com story was published on March 5th, the day before my story. It contained much new information, including the revelation of the Ginn-LA cash distribution. Hardly old news.