Bright’s Creek pays off debt
Published 3:06 pm Friday, November 20, 2009
Brights Creek Golf Club lacks one thing most other recreational communities have these days bank debt.
The board of managers of Brights Creek Holdings LLC announced this week that Brights Creek has paid off the last of its bank loans. In addition to talking to the Bulletin, the development ran a full page ad in the Asheville Citizen-Times recently touting the news that the Mill Spring development is Bank debt free!
This is colossal, said Tom Harris, director of sales and marketing. Only a tiny percentage of new golf course communities are debt free. This really separates us. We were lumped in with the good, the bad and the ugly.
Brights Creek had initially borrowed $48 million from First Union and Wachovia for its Phase I construction loan. With that, the developers built 300 homesites, a Tom Fazio golf course, and all the related infrastructure water lines, roads, natural gas and fiber optic cable.
After selling most of the Phase I homesites in the first few years, the developers paid off that initial loan and then went back to Wachovia for a construction loan to develop 166 lots in Phase II.
In October, the board of managers decided it would be a good idea to pay off Wachovia, Harris said. He did not disclose exactly how much that Phase II loan was for, other than to say millions.
There are no more construction loans at Brights Creek, Harris said. This was the grand bulk of our debt. There is still some debt on some outlying filler parcels we bought, but no forecloseable debt, no bank debt.
Harris said some master planned communities facing interest and amortized principal payments to their banks have been unable to pay those loans and have had to take bankruptcy or foreclosure.
One glaring example is within the Brights Creek market area. Henderson Countys Seven Falls Golf and River Club filed for Chapter 11 bankruptcy last month after the National Bank of South Carolina filed foreclosure documents on Seven Falls and Zeus Investments, saying the developer defaulted on $15.7 million in loans. The Seven Falls golf academy, practice range and partially completed golf course were used to secure the loans.
We have none of that kind of debt, Harris said. That is colossal in this industry. We can now say to a member or lot owner that we are a financially stable community and thats the proof. We can say the same to a prospect or client who may be worried about foreclosures in the industry. Were hoping to get prospective buyers out of their nervousness.
While sales have been slow for more than a year at Brights Creek, Harris said the development was lucky in its timing, getting a four year head start before the Great Recession.
Developer Barton Tuck led a group which bought the old Deep Gap Farm in Mill Spring, all 4,235 acres, for $18.5 million in March, 2003. Marketing began in 2004, well before the slowdown in 2007 and 2008.
We began selling homesites when the market was better, Harris said. We could then take those dollars and do more. We have fiber optic and natural gas in the ground and the streets paved. We have the first two phases of 460 lots, plus golf and an equestrian center. We were fortunate to have come in 2003 and hit the ground running. Looking back, we didnt realize what good timing that was.
Brights Creek has now sold 325 homesites. The club has 257 members and there are 29 completed homes at the development.
Brights Creek had lucky timing and good partners. The original 28 members of the land group led by Tuck, Hidden Springs LLC, released Brights Creek Holdings from a $48.6 million debt last May, taking back 3,200 acres of the original land purchase instead of demanding scheduled payments. The land investors gave the developer the option/first right of refusal to repurchase the 3,200 acres, as needed.
The current year has not seen much activity for Harris and his staff of three salesmen and a receptionist. The developer has about 100 company lots and 35 resales for sale, ranging from $175,000 to $1 million.
Harris said he believes next year should be better.
The prospects excuses for not buying are not as strong anymore. They are not waiting to sell something else. Their portfolios are not as worrisome, he said. They are still nervous, so we paid off our debt. We are teed up for the market improvement. We expect the market to gradually go up over next three years, not spike up.