VOL. 124 | NO. 126 | Tuesday, June 30, 2009
Lamar Crossing Developer Wants To Avoid Foreclosure
By Eric Smith
NOT TOO LATE: The unfinished Lamar Crossing Apartments are still on the verge of foreclosure, but the complex’s developer wants to salvage the project if possible. -- PHOTO BY ERIC SMITH
The Lamar Crossing Apartments are facing a foreclosure sale on the Shelby County Courthouse steps July 16, but the group that developed them is hoping for another chance to salvage the $11.7 million project.
Preston Byrd, principal of Horizon Financial Group, was unavailable for comment when The Daily News first reported about the trouble surrounding Lamar Crossing, a 120-unit multifamily complex on Lamar Avenue, just north of Interstate 240.
But when Byrd saw the article, published in the June 23 issue, he provided additional information about the property, which was 85 percent complete when financing ran out, construction was halted and a chain-link fence was erected around its perimeter.
As Byrd noted, and as other sources corroborated, Lamar Crossing ran into cost overruns early in the construction process, beginning in 2007.
Horizon, operating in this project as Lamar Crossing Apartments LP, faced soil problems on the 7.13-acre parcel. The company had to excavate 17,000 cubic yards of unsuitable materials from the site, adding about $1 million in the first three months, Byrd said.
“These cost overruns threw the project completely upside-down and out of budget,” he said.
Horizon was working under two tiers of financing on Lamar Crossing – an $8.1 million bond from Arvest Bank of Oklahoma and $3.4 million in equity from Boston Capital Corp.
Byrd said Boston Capital’s equity was scheduled to come into the project once construction was 95 percent complete, but because of the cost overruns, “we ate through the bond money quicker, so the project never made it to 95 percent complete.”
Byrd said Boston Capital told him it was not obligated to release those funds because the project hadn’t reached the 95 percent benchmark.
“The project, technically, isn’t out of money,” Byrd said. “Boston Capital still has $3 million in escrow that they’re sitting on that they won’t release to the project, which is significant.”
Attempts to reach Boston Capital executives were unsuccessful.
Byrd said the company might file a motion to stay the foreclosure, in part because the project is so close to being finished. The interiors of two of the buildings are complete except for appliances and flooring. Another two are not completed.
“With the balance of the proceeds that Boston Capital is holding, if in fact we can convince them to release those funds, we can get the contractor paid and finish the job,” Byrd said. “It’s our goal to complete this project that we started. We need the cooperation of other folks involved to get there.”
Byrd said Horizon remains committed to owning the property and someday developing the front two acres into a commercial strip center, which would join Aldi Inc.’s grocery store as retail components of the property.