Developer Rick Ferguson Juggles Debt After High-End Meltdown

by George Waldon  on Monday, Jun. 10, 2013 12:00 am  

Events during the past five years have administered a fiscal stress test for residential developer Rick Ferguson, and 2013 has been a year of restructured debt and real estate holdings.

Ferguson offered only a few comments related to his private financial dealings although some of his challenges have spilled into the public domain.

  • A business partner, Gene Cauley, disintegrated financially leaving Ferguson to sort through a debt-laden real estate portfolio they shared.
  • Ferguson also was stung by a Ponzi scheme that featured uninsured, high-yield certificates of deposit issued by a bank that Texas financier “Sir” Allen Stanford owned in Antigua, where he was knighted. Ferguson declined to say just how much the investment scam cost him, but it is believed to have been more than the $2.5 million that another former business associate, Steve Wortman, has acknowledged losing in the same scam.
  • The top-end housing market, the bread-and-butter of Ferguson's upscale home building business, all but dried up as the Great Recession bore down.

All of this brought additional pressure on the ambitious Waterview Estates project that he and his father, Randy, launched.

The 38-lot opening phase of Waterview Estates, overlooking Lake Maumelle near Roland in west Pulaski County, is home to eight houses, two of them owned by Rick Ferguson. Another is owned by Bank of Little Rock after the bankruptcy of homebuilder Jon Lewis.

"We're all struggling," Ferguson said of the market conditions.

Financial strain shook up the ownership roster in a neighboring residential project that Ferguson and his dad put together with 13 others

Lagging sales in Waterview Estates led to a reworking of debt earlier this year with Regions Bank of Birmingham, Ala.

Ferguson orchestrated the purchase of four Regions mortgages that totaled $6.3 million (as of February 2012) in a deal that allowed him to shed more than $1 million of debt and releverage most of the property.

The Regions mortgages were replaced with a $3.5 million loan from Malvern National Bank and a $1.4 million loan from Bank of Little Rock.

Securing the Malvern National mortgage are 15 lots in Waterview Estates and 200 undeveloped acres north of Roland. The property previously secured two pieces of Regions debt: a $1.7 million Waterview Estates construction loan and $2.7 million owed on a $3 million letter of credit.

The Bank of Little Rock mortgage is secured by 224.2 acres about five miles west of the Waterview Estates project. The undeveloped land previously was tied to $1.1 million of Regions debt.

Earlier this year, Ferguson also used some of his substantial west Pulaski County acreage to rework real estate debt that he and Cauley took on before Cauley went to federal prison for stealing more than $9 million from a client trust.

Ferguson transferred 75 acres of undeveloped land about 4.5 miles west of Waterview Estates to IberiaBank of Lafayette, La., to partially settle debt owed on an unsuccessful industrial deal through I-30 Land Co.

He put up 127 acres about two miles northwest of Valley Falls Estates as collateral on $1.6 million of remaining debt with IberiaBank.

Cauley and Ferguson's I-30 Land originally owed IberiaBank $5 million secured by the 57.3-acre former Lucent Technologies development at 7400 Scott Hamilton Drive.

The 572,800-SF industrial facility in southwest Little Rock was sold a year ago for $2.47 million to Goodwill Industries of Arkansas Inc., led by Brian Itzkowitz.

"You just keep working hard," Ferguson said of his business travails.

In the Meadows

The president of Mike Kuhn Construction Inc. reports that several new homes will start construction in the coming weeks in the neighboring Waterview Meadows neighborhood.

“It’s definitely picked up,” said Mike Kuhn, a Waterview Meadows investor. “We have seven presolds we’re fixing to start on out there.”

The project’s $11.6 million financial package has been modified and extended six times by Centennial Bank of Conway since September 2007. The latest changes to the three Waterview Meadows loans were made in April and include a two-year extension.

“Centennial has been absolutely fantastic to work with,” Kuhn said. “They’ve adjusted rates to help. What else can they do? They don’t want to make this difficult. We’re all partners in this together.”

To help generate activity, a group was formed within the group. Five of the Waterview Meadows investors established WVM Construction LLC, which built and sold two spec homes.

WVM is composed of Randy Ferguson, Carl Henson, Bill Parkinson, Oscar Washington and Bret Franks.

A 3,136-SF home on a 0.63-acre lot was sold for $475,000 in July 2012, and a 3,587-SF home on a 0.6-acre lot sold last month for $454,000. In an effort to reduce the price point of home sites, the original 40-lot configuration of the first phase was replatted into 58 lots.

“We got started on this at a bad time, when the housing market slowed down,” Kuhn said.

 

 

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