The Situation

A large national developer, with more than $1 billion in real estate projects throughout the Eastern Seaboard, had a residential development project in the Southeast that was entirely sold out but that was failing due to local zoning and code issues.

The Challenge

The project started to lose sales due to zoning and code delays as well as other governmental issues. Additionally, the General Contractor filed for bankruptcy. With the lender demanding order and accountability, the developer needed Real Diligence to provide immediate crisis management and loan workout support.

The Solution

Real Diligence sent in a project team to gather information from every vendor involved in the project. The RD team did a complete review of the project's accounting and prepared reports for the bank and bonding company. Together with RD's due diligence specialists, the project team documented the physical status of the site and coordinated all of the different expert reports to gain a proper understanding of the property's status at the time it was abandoned by the contractor. Upon compiling the reports, the RD team held live meetings with the lenders, bank inspectors and bonding company to properly update them and provide a road map for the future. Real Diligence also coordinated new contractor bids and interfaced with the bank to secure additional funding to sufficiently cover completion of the project. Finally, Real Diligence coordinated the legal team to assist with these efforts and pursue all available remedies under the bond.

The Results

On behalf of the client, Real Diligence successfully settled with the bonding company to recover enough money to complete the project and cover all over-runs and delay costs. The bank was satisfied with the progress and kept the borrowers in good standing throughout the workout process and while the project was completed. Real Diligence also assisted in bringing in new equity. The project was successfully completed and a Certificate of Occupancy was issued within thirteen months of Real Diligence's involvement.