Jason Sandford
Jason Sandford is a reporter, writer, blogger and photographer interested in all things Asheville.
Here’s a very interesting blog post about the financial difficulties facing The Cliffs development in Swannanoa, which is being buffeted by a terrible real estate market and blowback from the Tiger Woods scandal. It sounds like The Cliffs is in a tough spot.
From www.GolfCommunityReviews.com:
The fallout from a bad economy that is wreaking havoc on the high end of the leisure residential market, as well as an unfortunate bet on Tiger Woods, may have caught up with upscale Cliffs Communities in North and South Carolina. According to a Cliffs property owner, developer Jim Anthony is testing residents’ and club members’ appetite to commit $60 million in debt financing, or about 40% of what The Cliffs has reportedly invested in its High Carolina community, including land and Woods’ alleged $20 million design fee.
The $60 million would be raised in the form of bond notes that will pay a minimum of 12% interest over seven years, according to the Cliffs homeowner. Minimum participation is $100,000 per owner, and The Cliffs is putting up its impressive roster of amenities, including golf courses, wellness centers and restaurants, as collateral. Non-owners will not be eligible to participate.
The Cliffs investigated outside debt financing but their payments would have exceeded 12%, according to the owner. Such interest rates imply great risk and, if anything, compromise The Cliffs’ well worked public image of sophistication. That image, however, has taken a beating courtesy of the Woods scandal and the ill-timed placement of embarrassing billboards around Asheville.
By offering ownership of the debt to residents, The Cliffs avoids the potentially unpleasant publicity of a “junk” rating. It also avoids the potential that, in the case of a default on the loan, outside investors would likely rush to liquidate their investment, an especially unpleasant scenario for owners of Cliffs properties who could see their property values plummet along with the value of their club memberships (for which they paid as much as $150,000).
According to our owner contact, who says he is inclined at this point to buy into the bond note, The Cliffs has opened its books to residents, and Jim Anthony has put up his personal assets, along with The Cliffs amenities.
Thanks to loyal reader Rick for the heads-up.
The potential that, in the case of a default on the loan, outside investors would likely rush to liquidate their investment, an especially unpleasant scenario for owners of Cliffs properties who could see their property values plummet along with the value of their club memberships
Let ’em dangle (thanks to Elvis Costello). The last thing we need here in WNC is another pretentious gated community. Then again, the gates tend to keep the true animals in…
I think this story missed it’s headline.
"On the edge of a Cliff"
duh, like no one saw this coming?
This is an amazing story. I would love to read more about it. Dig into it, Ash! Wonder if there are some public documents about all of this that would provide more details? Keep up the good work! I love your blog.
I sure hope the state dosn’t bail Anthony out again.
That would not "Inspire Me". Ha, Ha!
Wow.