Credit Evaluation School Instructor eBook - Oct 2023

Internal Use Only

Vineland, Ltd. – Substandard, PORE Person: Vineland, Ltd is owned by developer John S. Hope. The property is a condo development of 25 units built in four phases. There are five units remaining in the fourth and final phase. Purpose: Funds of 2,244,985 were advanced for construction of the townhouse complex. All units are similar. Payment: Principal is paid down as units are sold, with quarterly interest payments required on the balance. Protection: First REM covering the remaining five units which were appraised in September of 2012 (3 years ago) at 805M for the original six units in this phase (or 134M per unit). With balance of 370,382, the loan is at 74M per unit. Performance: Sales have slowed, straining cash flow. Instead of selling the remaining five units, they have been rented out at 4,650 per month; however, rental income was either insufficient to service debt or was not given to bank. Loan is 150 days past due and is on nonaccrual. Banker is considering options, such as foreclosure. First plan is to try and sell to the current tenants. As listing prince was 135M and loan is 74M per unit, risk of loss is not perceived to be high, so feel could foreclose and cut price and come out whole.