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Terra Verde buys Lehman property

The opportunistic and distressed real estate investment firm has acquired an unfinished residential community in Tennessee, with an expected value of about $750 million, from the bankruptcy trustee.

Terra Verde Group has purchased The Grove, a partly completed master-planned community located south of Nashville, Tennessee. The property was part of a portfolio of real estate assets financed by Lehman Brothers prior to its 2008 bankruptcy, the largest in US history.

Lehman had provided a $120 million to the project’s original developer, Nashville-based Tentara Partners. Then known as Laurel Cove, the project began construction at the end of the last real estate cycle and nearly $100 million of the loan commitment had been funded when the financial services firm collapsed. Terra Verde bought the asset from a Lehman bankruptcy trustee for $11.25 million and plans to invest an additional $15 million in the property over the next two years.

The assets acquired includes a 1,120-acre residential community that was planned for 820 units; a 7,400-yard golf course that is about 60 percent complete, as well as a 33,000-square-foot clubhouse; a spa and fitness centre; and a tennis centre – all of which are in various stages of construction. Terra Verde intends to finish construction on the assets and sell residential lots to homebuilders and individual home buyers. The total cost for The Grove, including investment from homebuilders and individuals buyers, is projected at $750 million upon completion in 10 to 12 years.

The firm, which has offices in Texas, California and Tennessee, typically acquires opportunistic and distressed residential golf communities in partnership with private equity firms and hedge funds, as well as family offices and high-net-worth investors. Its current portfolio includes four communities in California, Arizona, Texas and Tennessee.

Last year, Terra Verde was selected as the stalking-horse bidder for the SunCal portfolio, consisting of three unfinished residential projects in California, which had been backed by a $395 million senior secured credit facility held by Lehman Brothers’ real estate private equity group. The portfolio was taken back after developer SunCal defaulted on the loan, and it ultimately was sold to an entity controlled by the debtor for approximately $71 million.