Span­ish Oaks res­i­den­tial, golf project posted for fore­clo­sure

Austin American-Statesman - - BUSINESS & PERSONAL FINANCE - By Shonda No­vak

In an­other high-pro­file fore­clo­sure, Comer­ica Bank late Tues­day posted Span­ish Oaks, a 911-acre lux­ury res­i­den­tial and golf course project in Bee Cave, for the Aug. 3 fore­clo­sure auc­tion.

Real es­tate ob­servers say the project, south of Texas 71 and Bee Cave Road, is in­dica­tive of the trou­bled high-end mar­ket, which could have a ways to go be­fore it turns a corner.

Span­ish Oaks’ own­ers had been in talks for some time with Comer­ica to mod­ify the terms of a $32 mil­lion loan to avoid fore­clo­sure. The orig­i­nal loan was for $34.4 mil­lion, ac­cord­ing to the fore­clo­sure fil­ing. The loan ne­go­ti­a­tions in- volved the golf course, un­sold lots and un­de­vel­oped land.

Span­ish Oaks is owned by a part­ner­ship of Ross Perot Jr.’s Hill­wood Devel­op­ment Co., which owns 65 per­cent; Dis­cov­ery Land Co., which has 15 per­cent; and Daniel Porter’s CCNG Realty Inc., with 20 per­cent.

Porter said Wed­nes­day that he re­mains hope­ful some­thing could be worked out with the lender “that will pre­serve value for all par­ties.”

“The bank main­tains an open di­a­logue,” said Porter, Span­ish Oaks’ orig­i­nal de­vel­oper.

In a state­ment, Hill­wood said: “As one of the three in­vestors, we are dis­ap­pointed that Comer­ica Bank de­cided to be­gin fore­clo­sure pro­ceed­ings against the Span­ish Oaks res­i­den­tial devel­op­ment and golf club. How­ever, all par­ties con­tinue to work hard to ne­go­ti­ate an ac­cept­able res­o­lu­tion of the debt.

“A pro­longed slump in the real es­tate mar­ket has taken a toll on many projects, in­clud­ing, un­for­tu­nately, this one.”

Hill­wood said the com­pany re­mains hope­ful that con­tin­ued ne­go­ti­a­tions with the bank and golf club mem­bers

will re­sult in an agree­ment to trans­fer con­trol of the golf club to the mem­bers.

Porter said that de­spite the dif­fi­cul­ties, the golf course at Span­ish Oaks — ranked by Golf Di­gest as one of the nation’s top pri­vate golf cour­ses — is well-main­tained and “in good shape.”

Hill­wood and Dis­cov­ery, the project’s man­ag­ing part­ner, were brought in as in­vestors in 2005, in­fus­ing $20 mil­lion along with CCNG.

Lot sales at Span­ish Oaks plum­meted in 2008, with just 12 sales, fol­lowed by six sales in 2009, av­er­ag­ing $424,000, Porter said in March.

But Porter’s at­tor­ney, David Arm­brust, sees bet­ter times ahead for Span­ish Oaks.

“Span­ish Oaks has all the fun­da­men­tals of a great project over the long term,” Arm­brust said. “As a re­sult, it will be one of the mar­ket lead­ers as the re­gion re­cov­ers and that re­cov­ery is hap­pen­ing now.”

The plan for Span­ish Oaks en­vi­sioned a com­pleted project by 2012 with 436 homes — an es­ti­mated $600 mil­lion worth of real es­tate, Porter said in March.

At that time, he said 270 lots had been sold and 125 homes built, with an av­er­age price of $1.5 mil­lion.

Span­ish Oaks orig­i­nally was 1,211 acres. Cy­press Realty Inc. bought 120 acres and later sold 88 to de­vel­op­ers of the nearby Shops at the Gal­le­ria.

CCNG owns an­other 77 acres at Span­ish Oaks that al­low for mixed-use com­mer­cial devel­op­ment.

Other Cen­tral Texas prop­er­ties that ended up in the fore­clo­sure fil­ings dur­ing the down­turn have in­cluded the 468-acre Rocky Creek Ranch off Hamil­ton Pool Road; Viz­caya, a lux­ury res­i­den­tial devel­op­ment planned on the Lake Travis’ south shore; MDR Hol­lows, de­vel­oper of the Hol­lows re­sort on the north shore of Lake Travis; and Avaña, a pro­posed 1,000-acre res­i­den­tial devel­op­ment at Texas 45 and Es­carp­ment Boule­vard.

Daniel Porter Orig­i­nal de­vel­oper on project says golf course re­mains ‘in good shape.’

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