Massey Selling Projects To Restructure Debt Load

Financial woes have been the norm lately for some area real estate developers. Liens, foreclosures, lawsuits and countersuits have been on an upswing as the market has experienced a downturn.

In August, First Western Bank of Bentonville filed foreclosures against developer Mitchell Massey to the tune of  $5.23 million. The bank declined to comment on the foreclosures.

Troubles with First Western aside, Massey said the vast majority of his banking relationships are good.

In early 2006, Massey began to sense weakness in the real estate market, and decided to sell certain projects and restructure his debt position, he said.

To that end, he has reduced his debt load to about 35 percent of what it was 18 months ago, he said. He wouldn’t say what his total debt is, but did say he has closed on more than $150 million in transactions – including sales and purchases – in those 18 months.

“In a down market, it’s more about getting off of debt than maximizing profits,” Massey said.

Since early 2006, Massey has sold or come out of partnership arrangements on several projects, including the Glenstone Condominiums in Springdale, which sold for $4.7 million and several residential lots in Bentonville, which totaled $1.7 million.

More recently, Massey sold his share of E. J. Ball Plaza, (see p. 6) and the Spring Street Lofts in downtown Fayetteville. He is contracted to close on the sale of land for the Ruskin Heights development off Mission Boulevard in Fayetteville.

In certain cases, Massey and some of his lenders have gone the route of deed in lieu of foreclosure arrangements. It’s an option he’ll continue to consider as he moves forward.

 “It took us five years to build the project inventory that we have and we’re trying to unwind it in a year,” he said.

Though he is selling many of the projects he’s spent several years and millions of dollars working on, “all of them were good, viable projects, which has been evidenced by the fact that the banks are willing to work with me and other investors have wanted to come onboard,” he said.

Not all of Massey’s projects are in Northwest Arkansas. He didn’t discuss specific details, but roughly half of his debt is tied up in projects in Florida.

Massey doesn’t have any projects coming online in the immediate future, because his primary focus is on moving property in its current state and not taking on any more debt.

Nonetheless, he is still involved with a large number of partners in both Northwest Arkansas and Florida projects, including retail, commercial, multi- and single-family housing, master planned communities and condominiums, he said.

Another part of how Massey sees himself moving forward is in using his knowledge of the market to put deals together for out-of-state investors looking to buy in this area.

“Everything is not all rosy, and there’s a lot left to be done, but those steps are being taken,” he said.

Despite the recent turbulence, Massey is optimistic overall.

“This market has so much to offer. It’ll see this downturn come and go and it will come back and those who’ve learned from it will be successful,” he said.