The developers of the Reynolds Plantation, one of Georgia’s most exclusive enclaves of vacation homes and golf courses, have floated a plan to sell off key assets like golf courses, clubhouses and even swimming pools to pay off $45 million in debt to impatient lenders.
It’s another blow to luxury golf communities in Georgia, following the foreclosure of Country Club of the South's golf course and last year’s bankruptcy and sale of Sea Island Co.
The news about Reynolds Plantation came to light after a letter was sent to homeowners Thursday, detailing issues for the development that is about an hour and a half drive east of Atlanta on I-20 on Lake Oconee.
According to the letter, signed by Reynolds Plantation Chairman Mercer Reynolds III, a group of banks is demanding a hasty payment of $45 million by April. The payment was requested while the development company was negotiating renewal of a line of credit.
In the letter, Reynolds says he and his cousin, Jamie Reynolds, had “pledged a number of additional assets (totaling approximately $60 million) to the banks,” but the banks still want the large payment in two months. The cost of construction of the amenities being sold is about $136 million, the letter says.
The Reynolds empire at Lake Oconee covers a vast swath of the lake shore in Greene and Putnam counties. It includes three gated communities—Reynolds Plantation, The Landing and Great Waters— a golf academy, and six golf courses, with a seventh on the drawing board. There are around 2,000 dwellings between the three communities.
Bud Sanders, a Greene County commissioner whose district includes Reynolds Plantation, said the letters caught him by surprise.
He said he’s “very concerned” because it is a very large part of the tax base.
“They obviously are having some financial troubles,” he said. “If it turns out that they have to start reducing prices on their property that’s going to depress it throughout the neighborhood and throughout the county.”
Attempts Monday to reach Reynolds Plantation were unsucessful.
The letter says the line of credit was used by Reynolds Plantation, Linger Longer Development Co., and its affiliates to buy land for further development of the ritzy subdivisions and golf courses that are near the Ritz Carlton Lodge, a popular destination for Atlantans.
“Historically, acquiring land in the Lake Oconee area to ensure that Reynolds Plantation continued to grow has been a reliable business strategy,” Mercer Reynolds wrote. “However, with this downturn, we found ourselves in the position of having acquired more real estate, and debt, for Reynolds Plantation than is supported by recent demand.”
The letter says the company is pursuing three options for selling the assets: the property owners association, a smaller group of property owners, or an independent third party that has made an offer.
The letter emphasizes that no decision has been made on which way to go.
Other assets being sold include marina facilities, a cottage rental operation, the Lake Club, the Nature & Heritage Center, and several administration and service buildings.
The Jackson House, described on the Reynolds Plantation Web site as “the jewel” of the development which “sits majestically over the entrance to the community,” also is for sale. It was built in 1883, and is an example of Steamboat Gothic architecture, the site says.
The Reynolds family has owned land in the area, once known as Cracker’s Neck, since the 1920s when the family patriarch owned a hunting retreat known as “Linger Longer.”
In the 1980s, the family started aggressively developing sites for retirement and vacation homes. It started with Reynolds Plantation, and was followed by Great Waters, featuring an 18-hole Jack Nicklaus golf course in the 1990s.
In the 2000s, Reynolds bought Port Armor, a competing development and renamed it The Landing at Reynolds Plantation. Later, a 251-room posh Ritz-Carlton hotel with a spa and golf course opened. The hotel is not part of the potential sale.
Today, Reynolds Plantation encompasses more than 14,000 acres and 90 miles of shoreline on Lake Oconee.
The Reynolds influence has stretched far beyond Lake Oconee. Mercer Reynolds served as national finance chairman for President George W. Bush’s re-election bid in 2004, and served as U.S. ambassador to Switzerland and Liechtenstein.
Linger Longer, meanwhile, was the chosen developer for the rebirth of Jekyll Island. The company’s grand $352 million redevelopment plans were pared to $170 million and eventually shelved in 2009 when Linger Longer pulled out “due to the uncertainty of the economic environment.” A more modest plan with other developers is underway.
Reynolds companies also bought distressed properties in the past decade, including a golf development near Dahlonega renamed Achasta and a planned community near Blowing Rock, N.C.
But sales have been slow.
One concern for those around Lake Oconee is how the sale of the golf courses and other assets will affect home values there.
After high-volume sales through the mid-2000s, home sales plummeted. Financing for lot sales and even home construction became hard to find. Land values dipped.
Condos without golf or lake views start in the $300,000 range, climbing to near $1 million for glimpses of the water and greens. Lake lots can rise well above $1 million, with homes on the water going much higher.
The past year has shown some signs of improvement. Home sales have picked up and prices have stabilized.
“We’ve hit bottom and we’re on the upswing,” said Tom Martin, president and COO Coldwell Banker Lake Oconee Realty. “We see people back in the market looking for a purchase.”
Commissioner Sanders said the letter about the developers’ financial challenges is likely to “make people think twice,” before buying homes there.
Still, he expressed confidence in the developers. “Knowing the folks I do know out there with the organization, they’ve got a game plan, and I feel confident they will make it work.”
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