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alstry (35.45)

CA Builder Defaults Exploding

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April 25, 2008 – Comments (2)

First it was Kimball Hill that went BK.  Then Renyen and Bardis principal declares personal bankruptcy.  Now SunCal Cos. defauted on its $235 million dollar loan on its Bakersfield golf course community.  ALL IN ONE WEEK.

The dominos are starting to fall.  Orange County new homes sales through the first 22 days in April are down 56%.  Foreclosures show no signs of slowing and inventory keeps growing.

As more and more builders fall under the protection of bankruptcy reorganization, they will have a competitive advantage against non bankrupt builders.  A uneven playing field is developing for developers which will like force more builders and developers into bankruptcy to reorganize finances to be able to compete financially.

As we approach the end of the month, a lot of obligations are due.  Expect to hear about a lot more problems in CA that can't be fixed without reorganizing.

 

 

 

 

 

2 Comments – Post Your Own

#1) On April 25, 2008 at 11:47 PM, alstry (35.45) wrote:

Whoops, forgot about this BIGGIE:

A large California land partnership involving one of the largest U.S. pension funds has received a notice of default on a $1 billion loan after failing to meet certain terms of its lenders.

LandSource Communities Development LLC, a partnership that involves the California Public Employees' Retirement System, received the default notice Tuesday, amid talks to restructure $1.24 billion of debt. The partnership ... owns 15,000 acres in Southern California ...

http://online.wsj.com/article/SB120916479361446151.html

This is a huge development outside of LAX that CalPers purchased from Lennar last year.  Good for Lennar, bad for California Teachers. 

Maybe this has some relevance to a few Calpers investment executives resigning this week.

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#2) On April 25, 2008 at 11:52 PM, alstry (35.45) wrote:

Here is one from Iowa today:

State's largest home-builder lays off 103 workers

DES MOINES (AP) — Iowa's largest home-builder, Regency Homes Inc., laid off all its employees except for top management in its homebuilding and land development companies Friday.

A letter addressed to friends and partners of the West Des Moines-based privately held company said employees were told Friday afternoon of "deep layoffs."

The company said it is working with financial advisers and legal counsel on the issue of vendor payments and other cash obligations "that our current situation does not allow us to fulfill."

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