Land Developer in Virginia Faces Threat of Bank Foreclosures

by on States

Greenvest LC, the largest private land developer in Loudoun County, Virginia has defaulted on its almost $130 million loan. This put majority of the company’s real estate holdings into bank foreclosures which will be auctioned off at the county courthouse.

The developer, which has been embroiled in a series of development disputes, has an option to stop outright the foreclosure and auction of its 4,123-acre property which accounted for almost 75 percent of its holdings in Loudoun.

The company could file a Chapter 11 bankruptcy before the foreclosure auction to enable it to have control over the liquidation and disposition of its assets. The bankruptcy will also allow the privately held company to retain some of its real estate holdings that are now in default.

Industry experts said that if the scheduled foreclosure auction would push through, it is unlikely that a bidder could afford the minimum price that will be set by the lender, iStar Financial. In this case, the property would be in full control of iStar Financial.

Experts said that there is a possibility that iStar would negotiate with developers, or with Loudoun County which has expressed interest to purchase a portion of the foreclosed land for schools.

Meanwhile, County Supervisor Jim Burton said that what is happening to Greenvest mirrored the trend in the real estate development business in Loudoun. He said that there are investment groups who have expressed interest to bid for the foreclosed property.

Industry experts said that the county is interested to know what will be the outcome of the scheduled foreclosure auction of the Greenvest holdings. Its interest lies on the possible devaluation of values of county land if the foreclosed Greenvest property will be sold below its market value of about $165 million.

Foreclosure rate in Loudoun County remained steady in 2008, posting about 190 foreclosures monthly for an annual total of 2,310.

The financial collapse of Greenvest was due to its failed efforts to rezone its 4,123-acre land to allow it to construct nearly 15,000 houses in four separate neighborhoods. In 2008, the Board of Supervisors opposed the proposal of the Loudoun County School to purchase about 100 acres of land holdings of Greenvest for $20 million.

The school site, along with an adjacent 375-acred property, was acquired by Greenvest for $25 million.