Tarragon Announces Progress on Addressing Liquidity Issues
Completes $90 Million of Property Sales; Expects Another $280 Million of Property Sales by Year-End; Anticipates Pre-Tax Impairment Charges of Approximately $350 Million
Tarragon Corporation (NASDAQ: TARR), a leading mixed use developer with a focus on for rent and for sale multifamily housing, today announced further progress on addressing its previously disclosed liquidity issues.
Tarragon recently completed the sale of five properties which included two residential properties (Deerwood Village in Ocala, FL, and Vista Grand in Tampa, FL), two commercial properties (Midway Mills in Dallas, TX, and 290 Veterans in Rutherford, NJ) and a land development project in Orlando, FL. The aggregate sales price for these properties was $89.6 million, resulting in approximately $16.5 million of net proceeds to Tarragon after distributions to partners and repayment of $66.6 million of debt. Tarragon estimates that it will realize a net pre-tax gain, after giving effect to impairment charges to be recorded for certain of the properties, of approximately $6 million from the sale of these five properties.
Tarragon currently has six other properties under contract for sale that are presently expected to close by year-end. The aggregate sales price for these properties is approximately $280 million. These pending sales, which remain subject to customary closing conditions, are estimated to yield net cash proceeds of $54 million, after partner distributions and repayment of $203 million of debt. Tarragon expects to realize a pre-tax gain, after giving effect to impairment charges to be recorded for two of the properties, of approximately $43 million on these sales.
Since March 31, 2007, Tarragon has sold 14 properties for an aggregate sales price of $279 million. These sales have generated net cash proceeds of $44 million and reduced the Company's consolidated debt by over $200 million.
Tarragon presently expects to record pre-tax impairment charges of approximately $350 million when it reports its financial results for the second and third quarters of 2007. The charges stem from both realized losses on the sales of properties as well as write downs to reflect the estimated fair value of properties still held by the Company. As previously reported, the Nasdaq Listing Qualifications Panel recently granted the Company an extension to file its Form 10-Qs for the quarters ended June 30 and September 30, 2007. With this extension, Tarragon's common stock will continue to be listed on the Nasdaq Global Select Market, subject to filing these reports with the SEC on or before December 21, 2007.
Tarragon also announced that it has entered into agreements with National City Bank and Regions Bank to restore to good standing a combined $130 million in loans made to Tarragon and/or its affiliates. To date, Tarragon has restored approximately $950 million in loans to good standing. Negotiations continue with one remaining major lender for the satisfaction or reinstatement of a loan of $160 million on six properties.
These transactions are part of an overall plan designed to improve the Company's liquidity and financial condition. The plan currently contemplates additional property sales, the proceeds of which will continue to be used to repay Tarragon's outstanding debt, satisfy other obligations and to provide additional liquidity while it restructures and streamlines the organization to reposition the Company for future opportunities.
"In the past several months, we have made good progress by reinstating to good standing most of our outstanding debt and improving our liquidity through the sale of non-core properties," commented William S. Friedman, the Company's Chairman and Chief Executive Officer. "Given current conditions in the real estate and credit markets, we still face significant challenges, including covenant non-compliance under our existing $125 million of subordinated debt, with respect to which short term waivers have been received. The special committee formed last August is continuing to work with Lazard, the Company's financial advisor, to evaluate strategic and other alternatives."
About Tarragon Corporation
Tarragon Corporation is a leading developer of multifamily housing for rent and for sale. Tarragon's operations are concentrated in the Northeast, Florida, Texas and Tennessee. To learn more about Tarragon Corporation, visit: www.tarragoncorp.com.
Forward-looking Statements
Information in this press release includes "forward-looking statements" made pursuant of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are based on management's expectations, estimates, projections and assumptions. Words such as "expects," "anticipates," "intends," "estimates," "designed to" and variations of these words and similar expressions are intended to identify forward-looking statements, which include statements regarding discussions with other significant lenders, the expected use of net proceeds of currently contemplated property sales, Tarragon's financial condition and short-term liquidity needs and strategic and financial alternatives that may be pursued by, or available to, Tarragon. Actual results and the timing of certain events could differ materially from those projected or contemplated by these forward-looking statements due to a number of factors, including Tarragon's ability to complete currently contemplated property sales on acceptable terms and conditions and to identify suitable strategic or financial alternatives in the near-term, the results of negotiations with Tarragon's lenders and other creditors, risks associated with the potential delisting of Tarragon's common stock from the Nasdaq Global Select Market, Tarragon's ability to make the required SEC filings by the deadline set by the Nasdaq Listing Qualifications Panel, conditions in the homebuilding industry, the residential real estate and mortgage markets and the capital and financial markets generally, general economic conditions, interest rates and other risk factors outlined in Tarragon's SEC reports, including its Annual Report on Form 10-K for the year ended December 31, 2006. Tarragon assumes no responsibility to update forward-looking information contained in this press release.
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Contacts:
Broadgate Consultants, LLC
Alan H. Oshiki
(212) 232-2222
Email Contact
Tarragon Corporation
William S. Friedman
(212) 949-5000
Email Contact
Source: Marketwire (November 27, 2007 - 11:52 AM EST)
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