Focus Management Group

Real Estate Industry Experience

Vertically-Integrated Homebuilder

Company:

Vertically-Integrated Homebuilder

Situation:

Recent downturns in the economy drastically reduced sales volume as well as the value of the Company's current assets causing the lender's borrowing base to contract beyond the company's ability to respond.

Focus Scope:

Focus was contracted primarily to quantify the value of the company as an ongoing business and under a liquidation scenario.

Tasks Performed:

Focus reviewed and validated the rationality and attainability of the Company's existing rolling 13 week cash flow model. Additionally, Focus reviewed the Company's operations on a project-by-project basis, including a review of:

  • Current cost budgets for each existing project including a determination of estimated costs to complete
  • Status of land development costs on finished lots
  • Status of Company exposure on existing Performance Bonds and Letters of Credit
  • Current Unit Valuation Estimates
  • Current Borrowing Base Agreements
  • Finally, Focus prepared liquidation analysis for Company under 6 and 12 month scenarios and evaluated alternative courses of action available to the lender regarding asset recovery strategies.

Results:

  • Focus determined that the highest return to lenders would be achieved by maintaining the Company as a going concern to manage an orderly 12 month monetization of Backlog, Spec. and Model Units.
  • This process involved major headcount reduction, extensive elimination of excess overhead and negotiated reductions in trade payables
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