A top Snohomish County land developer acknowledged Wednesday it is working urgently to sell properties and shrink its debts. Everett-based developer Barclays North...
A top Snohomish County land developer acknowledged Wednesday it is working urgently to sell properties and shrink its debts.
Everett-based developer Barclays North has struggled since late last year to repay loans from nearly 100 banks and other lenders, according to court documents. Company officials said in court papers in January that Barclays North and its many affiliates were in default with at least 56 lenders, though most had agreed to hold off any action until the end of March.
A spate of recent lawsuits suggests some of those lenders are getting impatient.
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But Barclays North founder and CEO Patrick McCourt said in a prepared statement Wednesday that “while we have many hurdles ahead of us, Barclays has reduced its outstanding debt by 61 percent in the past 100 business days.”
He said recent steps by the company include “layoffs, consolidation of our operations, freezing the status of current projects and an accelerated effort to sell our projects.”
“We have not, nor do we have plans to file for bankruptcy,” McCourt added.
A company spokesman, David Troyer, said Wednesday that McCourt was not available to elaborate on Barclays North’s finances and plans.
At one time the company was ready to sell 17 projects in Snohomish County and elsewhere for $150 million to major builders such as Centex, D.R. Horton and Quadrant, but those contracts evaporated in late 2006 due to the housing downturn, according to McCourt’s January declaration in a lawsuit filed against Barclays North by Banner Bank.
Those deals would have given Barclays North “over $30 million for cash-flow purposes. Instead, Barclays was left with an unexpected shortage of cash flow,” said his court filing. As of January, said the filing, “Barclays is rapidly trying to satisfy 56 regulated lenders and 43 nonregulated lenders.”
The financial crunch forced the company, which owned property in four Western states and South Carolina, to attempt an “orderly disposition of all of Barclays’ real-estate assets,” said the papers, filed in King County Superior Court.
That’s a tall order, considering Barclays North created more than 150 legally distinct entities for different projects, according to company literature, and owes money to banks spread from Ohio to Hawaii.
Until recently, Barclays North was among the area’s fastest-growing and most ambitious developers. In Snohomish County alone, Barclays last fall listed for sale nearly 1,400 residential lots worth $74.3 million, according to a story an Everett Herald story on the housing slowdown last October.
Its other activities include developing a 21-story luxury condo project in downtown Las Vegas. An affiliate, BNI Equities, created investment vehicles for funding real estate projects.
Barclays North was listed in 2006 as one of the state’s fastest-growing private companies by Puget Sound Business Journal, with revenues that almost doubled between 2003 and 2005 to $50 million.
The financial condition of Barclays North recently became a matter of public discussion when the head of Snohomish County’s largest bank, Frontier Bank, felt compelled to address rumors about the bank’s exposure.
CEO John Dickson told the annual shareholders meeting April 16 that Barclays owed Frontier less than $300,000. In a conference call with analysts this week, Dickson said Barclays had been a “significant” borrower from Frontier until some loans were taken over by “some other borrowers that had… more financial strength.”
Barclays North senior corporate counsel Cameron Foster said in court papers early this year that nearly all the developer’s many lenders had agreed “to ‘stand still’ until March 31, 2008 in order to provide Barclays enough ‘breathing room’ to consummate an orderly liquidation of its real estate portfolio.”
But several creditors recently have begun pursuing the company in court:
• Barclays and one entity it controls, Hoover Hills LLC, were sued in February by Bingo Investments, of Bellevue, which says they are in default on a $1.75 million loan that was due March 2007.
• Barclays North and an affiliate called L104-Ghaffari LLC face a June foreclosure sale on unimproved land on Vernon Road in Lake Stevens to satisfy its default on a $260,000 loan from First Sound Bank of Seattle.
• Banner Bank in February won a $500,000 judgment against Barclays North, McCourt and his wife, Stephanie McCourt. Banner then went after Barclays North bank accounts at several other local financial institutions, court records show.
• Shoreline Bank also sued Barclays on April 11.
Barclays North spokesman Troyer confirmed that the company is one of the two unnamed borrowers mentioned by the parent of Cascade Bank, which said this week it had $16.8 million in nonperforming loans made to two borrowers.
McCourt, who founded Barclays North in 1989, has been “one of the top” land developers in Snohomish County for years, said Todd Britsch, president of New Home Trends in Mill Creek, a longtime consulting firm.
In recent years he’s focused on taking raw land through the regulatory process so builders could acquire it for new-housing construction, said Britsch.
“What got Pat into trouble,” said Britsch, was purchasing land in advance to supply “national contracts with very large builders,” who backed out after the housing downturn began in California and the Southwest in mid-2006.
Demand for undeveloped lots in Snohomish County “fell relatively hard and fast,” he said, “and when that happened the builders obviously didn’t need as many lots as anticipated. That left Pat and the banks holding this huge financial burden.”
“It’s as if Boeing were to build one hundred 737s … (and) Continental says, ‘I know we ordered them but we really don’t need them.’ “
He said McCourt has “a good reputation in the industry. He’s not running and hiding under a rock — he’s communicating with everybody on a regular basis.”
In court filings referring to late last year, McCourt said he had scheduled a conference call every Tuesday to provide an update to all of Barclays North’s many lenders.