Big fall for Crescent Resources - The Business Journal of the Greater Triad Area:

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The Charlotte-based real estate giant says it has morethan 5,00p creditors, according to its filing. , , , and are amonf Crescent’s largest unsecured creditors in Charlotte. with land holdings estimated atabout 75,000 acres, says its assetse are more than $1 billion. The filin g is necessary, the company says, to reorganize its reduce its debt and improve its capital Real estate analyst Chuck Graham says a bankruptcy filingfrom “a company of this stature” is a reflectiomn of the extreme stress facing the developmeny industry. “It’s a very sad event,” Graham “Crescent was a remarkable developerf that didremarkable work.
” Crescent plans to operate its continuing businesses without any significant interruptiob during the restructuring. That’s possible becausse of a recentlyobtained debtor-in-possession financing facilityy of $110 million from a group of its existinb lenders, Crescent says. “We intend to reacgh an agreement on our new capital structure and emerge frombankruptcy quickly,” Crescent’s new chief executivew Andrew Hede said in a Hede replaced longtime Crescent executive Arthu Fields, who announced his retirement on the same day as the Chaptere 11 filing.
Bankruptcy attorney Judy Thompsonb from the Charlotte office of Poyneer Spruill says a case of this size willbe time-consuming and “extremely expensive.” The filingy gives Crescent time to find funding to finish projects and hold lien creditors at bay. “They will try to structure a reorganizationn that fits a more workablecapital structure,” says who is not involves in the Crescent “What that means is selling off assetx and the jettison of some of their tradd debt.” The bankruptcy petitions were filed in the U.S. Bankruptcy Court in the Western District of Austin division. The company has 120 days from the filingt date to submit a reorganization plan.
Attorney Eric Taube of in Austin will represent Crescenyt inthe proceedings. The company — jointly owned by and — is best known here for developmentof high-en d communities on Lake Normab and Lake Wylie. Duke formed Crescenyt in 1969 to develop property it acquire through itsutility business. That included waterfron t property at Lake Norman and Lake which serve as reservoirsfor Duke’s hydroelectric and nuclea power plants. In September 2006, Duke entered into a joinf venture with Morgan StanleyReal Estate. Morgan Stanleyh paid Duke $415 million in cash and assumedx $656 million in debt for its stake in the thenworth $2.1 billion.
As part of the transaction, Crescen borrowed $1.2 billion and distributed the proceeds to Duke to transferf the debtoff Duke’s balance sheet. Duke and Morgan Stanleyu each havea 49% stake in Crescent. The remainintg 2% interest in Crescent — which would have been wortnh $42 million when the deal closed — was issued to The Charlotte Business Journal reported in April thatCrescengt — facing a $1.2 billion term loan due by Septemberd 2012 — had begun selling assets at fire-sales prices. In October, Crescent sold 4,500 acresw in Berkeley County, to for $40 million. In December, the compang sold a Florida apartment projec tfor $11.
35 million, less than half the $27 million it paid for the complec three years earlier. Crescent’s residential business mode l was hurt by its dependence on smallcustom builders, locaol consultant Graham says. The company has 38 residential communities undeer development inthe Georgia, Texas, Florida and and is currently building 1,200o apartments. Before the residential market crashed, the company’sx success was tied to speculativedbuilder inventory. Builders woulsd have as many as 40 homes under various stages of construction in any given Crescenf community a fewyears ago, Graham That market, driven by relocation has come to a standstill.
Walteer Fields, a local development consultant, says Crescent’sw problems aren’t an isolated “I think Crescent is a fundamentalluysound company. The projects they have done are projectws that havebeen successful,” he Companies such as Crescentr have been “caught up in wholew lot of stuff not of theirf own making.”