In another sign of the times prominent luxury real-estate developer Tarragon Corporation filed for Chapter 11 on Monday. Tarragon’s business isn’t McMansions—it owns nearly 12,000 rental units and has been developing nearly 4,000 city condos and houses.
WSJ: Tarragon’s bankruptcy filing followed a number of ill-timed real-estate deals, including a big bet on the south Florida condo market. The developer’s plans to buy rental apartments at high prices, and convert them to luxury condominiums flopped when buyers failed to materialise and renters fled.
If anyone has been to South Florida in the past few years this overbuilding is not new.
Chief Executive William S. Friedman acknowledged that management had failed to exit the Florida condo market soon enough, but he blamed primarily the credit crunch for the company’s problems. The “real estate business is a little bit like an ocean liner and you cannot stop on a dime,” he said in an interview.
But Tarragon watchers in particular probably saw the trouble coming.
South Florida Business Journal: The filing shouldn’t come as a surprise to anyone who has followed the recent fortunes of the firm, which included steady losses – more than $105 million for the first nine months of the year – bargain sales of assets, shareholders suits, deposit forfeiture on land deals, compliance trouble with NASDAQ, margin calls on the stock of the chairman and his wife, and the company’s inability to secure long-term financing.
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