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Florida Real Estate Developer, Ginn Clubs and Resorts, Misses Principal and Interest Payment

Signaling cash flow woes, Ginn Clubs and Resorts missed principal and interest payments on its first- and second-lien debt.

By Toby Tobin
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Palm Coast, Florida – July 2, 2008 – Well funded private developers are not immune from the cash flow problems already exhibited by higher profile public companies like WCI Communities. On Monday, Palm Coast, Florida's largest developer, Ginn Clubs and Resorts, missed principal and interest payments on its first- and second-lien debt, according to an LCD (division of S&P) report issued yesterday and emailed to me by two separate GoToby.com readers.
 
I contacted both the source for verification of its authenticity and the Ginn Company for their comments. Both the report and a statement from Ginn's president follow:
 

 
The Report States:
 
New York, July 1 (LCD) - Ginn Clubs & Resorts missed principal and interest payments yesterday on its first- and second-lien debt, sources said.
 
Interest payments are subject to a three-day grace period, but there's no grace on the principal, sources noted. Lenders have agreed to forebear from exercising remedies for 30 days, but haven't waived the default. Ginn's loans are in the Standard & Poor's/LSTA Index.
 
As part of the forbearance agreement, Lubert-Adler is kicking in $5 million of equity that will be used for operations, according to market sources. It will not be used to make payments on the Credit Suisse-led loans.
 
The company has already been in active talks with lenders regarding a restructuring of the company's $675 million credit facility. Those negotiations are ongoing, sources added.
 
Ginn's first-lien debt is quoted at 45/50 this morning, with the second-lien at 10/20, sources said. There was a small trade in the first-lien last week near 50 and the paper has been quoted at 47.5/52.5 since then. The second-lien loan was not active, quoted at 17.5/22.5 last week, down from 35/45 in early June.
 
The loans back the development of five communities by the Celebration, Fla.-based company. The properties are Tesoro, a mature community in Port St Lucie, Fla.; Quail West, a mature community in Naples, Fla.; Hammock Beach River Club in Palm Coast, Fla.; and the Laurelmor and Grand Bahamas projects, both of which include golf courses and single-family and condominium homes.
 

 
The following statement was received from Ginn President, Robert Gidel:
 
Today, Standard & Poor’s will release a statement that indicates two Ginn affiliated companies, Ginn-LA CS Borrower, LLC and Ginn-LA Conduit Lender, Inc. did not make a principal and interest payment on a non-recourse $675 million credit facility led by Credit Suisse. It will also state that we have reached a 30-day forbearance agreement and are actively negotiating with our lenders. 
 
There are four communities involved in this credit facility:
  • Ginn-LA St. Lucie, Ltd., LLLP, which owns Tesoro
  • Ginn-LA Quail West, Ltd., LLLP, which owns Quail West
  • Ginn-LA Laurel Creek, Ltd., LLLP, which owns Laurelmor
  • Ginn-LA West End Limited, which owns Ginn sur Mer
Due to the ongoing slowdown in the residential real estate market, it became clear that it would not be possible to meet the homesite sales objectives necessary to make payments due under the credit facility. 
 
We have been discussing these issues with the lenders for the purpose of seeking ways to restructure the terms of the credit facility. Today’s announcement of the forbearance provides an environment for both us as borrowers and the lenders to continue to work toward a restructuring of the credit facility, which we believe will occur in the next 30 days and will permit each of the communities to be completed as planned.
 
Even though sales throughout our industry have been lagging, nearly all development work has been completed at Tesoro and Quail West. While there is work left to do at Laurelmor, we have commenced work on much of the infrastructure, including the paving of miles of roadway and substantially completing the delivery of water and electric to the homesites.
 
Ginn-LA West End Limited previously set up accounts which contain the funds necessary to complete the infrastructure and the initial 18-hole golf course at Ginn sur Mer. These funds are not subject to the credit facility and are unaffected by the current situation, which means there will be no disruption to the continued development of the Ginn sur Mer project or the operations and development of Old Bahama Bay. The properties that are owned by Ginn-LA OBB, including the resort core of the Ginn sur Mer project, are not subject to this or any other credit facility. 
 
The Credit Suisse-led credit facility only affects these four communities. All of our other communities, including Reunion Resort & Club, Hammock Beach, the Conservatory, Bella Collina, Old Bahama Bay, Tesoro Preserve and Cobblestone Park, are separately funded and will maintain operations in accordance with business demands.   
 
This situation has no impact on our ongoing business operations throughout the company. In fact, we are creating new initiatives to create better experiences for our Members as we speak. We recently announced the formation of the Ginn One Club, which will provide reciprocity to our Members at select Clubs and Resorts throughout our portfolio. 
 
In addition, we are finalizing plans to complete amenities at our Clubs and Resorts including an expansion of the Waterpark at Reunion Resort & Club which will feature a Members-only area, expanding our pool and food and beverage venues at the South Tower Plaza at Hammock Beach, completing the lobby area and tennis pro shop at Yacht Harbor Village, completing the Social and Equestrian center at Bella Collina and finishing the Clubhouse at Cobblestone Park, among other projects.
 
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reader comments
Reply to James
Posted by Toby
Nov 16, 2013, 3:23 pm
7-31-08 2:45 pm
The forbearance agreement expired at midnigh last night. As of this moment, negotiations are continuing. More later.
anything new?
Posted by James
Jul 31, 2008, 2:39 pm
Is today the last day of this forebearance agreement and what is going on?
Confused
Posted by Ginn Property Owner
Jul 21, 2008, 4:58 pm
I first want to disclose that I own a condo at Yacht Harbor Village. My reason for posting is that I have always been confused as to why SO many people want to see the Ginn Company's demise. I noticed on the article about WCI having financial troubles that not one person commented on the article, which I was actually glad to see, because these times affect everyone and no need to state the obvious. Then I click on this article and read the handful of posts, most of which are negative.

Am I mad that I bought a condo there? The answer is yes, but I am only mad at myself, because the reason that I bought it doesn't add up in today's real estate environment. People, myself included, are always so willing to point their finger at someone else, rather than question their own motives as to why they did what they did in the first place. I think the word that I am searching for is humility.

All of Ginn's challenges are market driven. While there are certainly a few of his projects that are not finished completely, there are others of his that were finished with many more amenities than were proposed. Each person that bought in any of his communities signed a contract, though most were signed when "Ginn could do no wrong." People referred to him as having the midas touch. The reason so many people bought with him was because of his vision to build something incredible.

The reason that some of his communities haven't been fully completed is because people that signed a contract to purchase, with significant money down, backed out of those pictures once it was time to close on that purchase. This leaves less money to build amenities.

The more we property owners these communities, whether it be on this website, or at cocktail parties, the more chances we all have of making the best out of the situation that we are in. Realize please that I am saying this while I am SIGNIFICANTLY upside down in my purchase, so I am definitely feeling the pain that so many of you are. Regarding him lowering the prices of his Hammock Beach Tower Units, I wonder how many of those criticizing his decision offered to bail him out at last year's prices.

Also, I do not work for the Ginn Company, so I am completely unbiased in my opinion. I do have complaints about some decisions that were made over the years, but airing them in public or on a public website which is read by many baby boomers considering a move to Palm Coast does not help existing property owners, nor the town of Palm Coast.

If you are still reading this post, thank you for your patience and realize that this is only an opinion.

Thanks and God Bless!
The Ginn/Hilton Head Story
Posted by chubby clutchbutt
Jul 20, 2008, 7:06 pm
go to the NY Times Web Site (it's free) and type Bobby Ginn in the search box. It will pull up a story from the late 80's that has all the sordid details....
Just bought and closed
Posted by JE
Jul 11, 2008, 6:44 pm
a lot in Ocean hammock. Price was lower because it did not come with a HB Club Membership. I thought that was a plus and is why I bought this one.
Somebody, eventually, will come along and take over the Ginn HB Club and run it well. The area is just too nice for that not to happen. There is still a lot of potential in that area to be realized in the next 10 years.
Hung out to Dry
Posted by Hung out to Dry
Jul 07, 2008, 8:14 pm
Ginn deserves all that's coming!! He is a con artist. May the next hurricane rip his dreams away as he has done to so many people in his path. I say name the next hurricane headed towards the bahamas Greedy Ginn.
BriarRidge
Posted by G-Unit
Jul 03, 2008, 2:10 pm
I agree with JD, how can they forget about the BriarRidge
BriarRose - Hammock Beach
Posted by Willy
Jul 03, 2008, 2:10 pm
Two things:

Why don\'t we ever hear any news about the BriarRose? Didn\'t Ginn Clubs & Resorts just take over recently? From what I hear this property hasn\'t been developed on for the last 3 years, even after Ginn took it over.

To help with missing the payments you would all be happy to know Mr. Ginn cut prices in half on their oceanfront penthouses at Hammock Beach to help speed up sales. Today the asking price is around 500K. It\'s got to be scary for those folks who have already closed in the million plus range.

Looks like Hilton Head all over again. Maybe if the Ginn Company put some of that 400K purse to win the golf tournament towards payments it might help.
The past
Posted by RT
Jul 03, 2008, 10:42 am
Toby, I\'ve heard stories about Bobby\'s past in South Carolina. Do you know the short version of that situation? It would be interesting to know what happened there and if what is happening now with his company is similar to the past. Hope were not the next area who gets the Bobby Ginn bumper stickers. Being a Palm Coast resident I certainally hope things work out for the Ginn organization but things appear to be headed in the wrong direction.

RCT
Eternal optomist
Posted by BB
Jul 03, 2008, 10:42 am
Only Ginn could use a default notice as a marketing tool. Maybe all the Ginn-haters out there could learn a thing or two. Beating each other up during these times will only make things worse and lawyers rich.
Do not get it!
Posted by jd
Jul 03, 2008, 10:41 am
How in the world was Briarrose not mentioned as part of Ginn Clubs and Resorts while every other community is mentioned as part of Ginn? Something Shady is going on here
Missed Payments
Posted by MHL
Jul 02, 2008, 5:54 pm
Mr. Gidel can sure sling the BS as well as Julian and Bobby.
Hunh???? What do I not understand here? If they cannot make payments on one or thirty accounts, how can it not affect all communities that Ginn controls and I mean controls!!!!!

The CP clubhouse is barely out of the ground with all construction stopped in February, 2007. So now after a year, they are going to re-start construction? This company needs to be put out of business and NOW!

 
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Don "Toby" Tobin is a licensed real estate professional affiliated with Grand Living Realty. Toby is a member of the Flagler County Association of Realtors®, the Florida Association of Realtors, Enterprise Flagler, Flagler Home Builders Association, and the National Association of Realtors.

GoToby.com proivdes real estate news, commentary, and analysis for Palm Coast and Flagler Country Florida, as well as Realtor® referrals and consultation to buyers, sellers, and developers.