Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) on Tuesday said it had entered a series of agreements with Manufacturers Traders and Trust Company on two Virginia projects that will turn over one to the bank and extend the term of the loan on the other.
The projects, Belmont Bay in Woodbridge, Virginia, and Potomac Square in the Cascades community in Sterling, Virginia, originally had loans secured by the developments of $17.3 million originated in October 2006 on the former and $9.2 million originated in July 2004 on the latter. As a result of the agreements, the Belmont Loan, with a current balance of $7.0 million, will be released in its entirety and the Cascades Loan, with a current balance of $1.1 million, will be extended through January 31, 2011.
Under the terms of the agreements, M&T Bank agreed to release the Company from its obligations and guarantees and Comstock agreed to cooperate with the bank on its foreclosure on the remaining portion of the Belmont Bay Project, which includes 19 partially completed condominium units and 84 condominium building lots. The Company also entered into a non-interest bearing subordinated promissory note in connection with the Belmont Loan in the amount of $496,000 with a three-year maturity secured by the Cascades Project.
M&T Bank agreed to extend the maturity date January 31, 2011. All unpaid interest incurred prior to the effective date plus a non-refundable $50,000 extension and forbearance fee will be added to the current principal amount of $1.1 million due at the new maturity date. The company also agreed to begin paying interest due M&T Bank related to the current principal balance of the Cascades Loan.
The Cascades Project contains a total of 191 condominium units with the first phase (88 units) completed by the Company in 2007.
"We are pleased to have finalized these important agreements with M&T Bank," said Christopher Clemente, Comstock's CEO and chairman. "Not only have we eliminated a meaningful amount of debt related to the Belmont Bay project but we have also secured the flexibility and time needed to pursue a modification of the plans for the Cascades Project that converts the planned condominium product on the remaining lots into a more readily marketable townhouse product, which if achievable could position Cascades to positively impact 2010 results."