Tarragon Corp. (fka TRRPQ)

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Debt imperils New York-based Tarragon

Jan 13, 2009 (The Record - McClatchy-Tribune Information Services via COMTEX) -- Tarragon Corp., a troubled developer of multifamily buildings in Palisades Park, Edgewater and Hoboken, filed for Chapter 11 bankruptcy protection Monday.
New York-based Tarragon cited slow housing sales, falling prices and the tight credit market in announcing the bankruptcy filing in U.S. Bankruptcy Court in Newark.

"The real estate business is the wrong business to be in right now," said Tarragon CEO William S. Friedman. "We have too much debt." He said the company has lost $300 million in the last three years.

"The unprecedented condition of the real estate market speaks for itself," said Tarragon's bankruptcy lawyer, Michael Sirota of Hackensack. He said the company has assets of about $800 million and debt of about $1 billion.

Friedman said Tarragon hopes that large creditors will accept equity stakes in the company in return for wiping out debt. He also said the company will be reorganized into a smaller entity whose overhead can be supported by rent payments from buildings it owns.

Tarragon has built several luxury buildings in North Jersey, including the 168-unit One Hudson Park condominiums in Edgewater, where prices start around $600,000 for a one-bedroom unit, and the Trio condominiums in Palisades Park, where prices start in the $300,000s for a one-bedroom. Tarragon planned Trio as three buildings with a total of about 200 units, but has built only two so far. It has held off on the third building in response to a drop in buyer demand.

Tarragon also began an ambitious redevelopment plan for a mostly industrial part of northwest Hoboken. The project, called Upper Grand, was planned as an eight-block, mixed-use development of rental and for-sale housing, stores and a movie theater. Tarragon has constructed six residential buildings in the Upper Grand project, two of them rentals. It sold one of them last year to raise capital.

Friedman said Tarragon will hold off on building more of the Upper Grand development until after the bankruptcy case is settled.

Tarragon was hit with substantial losses in Florida, one of the most troubled real estate markets in the nation, as a result of overbuilding during the housing boom in the first half of this decade. The state, where Tarragon had about 20 projects, has experienced soaring foreclosure rates and plummeting home prices. But both Friedman and Sirota said Tarragon has also suffered losses in other states, including New Jersey.

The company has 300 employees, down from about 600 at the market peak in 2006. It said it has financing from an affiliate of the Israeli firm ARKO Holdings Inc. to continue day-to-day operations in its property management and rental apartment divisions.

Tarragon's stock dropped 4 cents Monday to close at 6 cents.



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Kathleen Lynn

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