Meltdown changed rules for commercial credit

    When the meltdown began, the rules of the commercial development game changed.
    Mike Graybill, a principal with Blanchard & Calhoun Commercial, was talking about the changes in credit rules for commercial development.
    (The company is widely known for its work outside of Georgia. It is known around here for most recently putting together Evans Town Center and Evans Exchange, as well as the land where CarMax is going up along Interstate 20. It does a lot of its work outside of Georgia.)
    The days of the developers getting loans with no money down is gone too, he tells me. The percent down on commercial projects is now 25 to 40 percent.
    The credit crunch problem facing developers now goes back to 2004 when they were taking out those easy construction loans. Those were all five-year loans, Mr. Graybill explained, and they are coming due soon. They were expecting to roll those into permanent loans with little or no down payment, no equity. But the rules have changed.
    So those developers who are sitting on $20 million projects went to 25 percent equity for every deal. "They simply don't have the equity," Mr. Graybill said.
    They can either hold a fire sale on their projects or ask the banks to take them back.
    There are billion dollar funds being formed nationally to snap up these foreclosed commercial centers. Mr. Graybill calls them vulture funds.
    Blanchard & Calhoun has contracts to buy three foreclosed shopping centers.
    "A bank in another state asked us to look at 25 properties that they had to see if we had any interest. We narrowed it down to three. We have a contract to buy those three. They are being bought at 50 cents on the dollar," he said.
    Mr. Graybill said Blanchard & Calhoun will be fine in the new environment, citing the fact that they're always doing things conservatively.
    "The money that is available is going to companies like us that the banks have a positive relationship with. Our company has never defaulted on a loan or paid back in lieu of foreclosure," he said.
    He said the principals in the company saw the writing on the wall two years ago. An inkling that the market was going to decline, although the crystal ball didn't say it was going to be this steep and quick.
    They started their own equity fund to raise $20 million so that they would have the down payment money for upcoming projects. They've gotten half of it so far, it seems the people who are exiting the stock market are interested in investing in these kinds of funds.
    Mr. Graybill said the problem they are going to have going forward is funding everything that they've got on the drawing board.
    "If we don't have the equity, we don't do the project. All we lost was the opportunity."
    He said with a laugh that they should have tried to raise $200 million.
   
    PEACHY: OK, we've spent a lot of time in the paper telling you about places closing down. It is a pleasure to write about some places that are opening up.
    PeachMac, one of Apple computer's largest retailers, opened its second Georgia store last week. It is on Washington Road across from Club Car.
    The last time I set foot in an Apple-only store was in the early 1980s when Apple stores had this computer club vibe to them.
    (Incidentally, we had an Apple IIc, which has been weighting down a piece of plywood in my parent's attic for the past 20 years. Can you say floppy disk?)
   
    MORE ZAPPING: John Cooper, the guy selling the electric cars on Washington Road, bought the Commerce Building at the corner of Broad and 7th streets. It is going to be his second showroom of the Zap electric vehicles in Augusta.
    With the work to be done to the old building, he doesn't expect to be open until next year - hoping it is before April.
    The bottom part of the building is going to be the business, the upper floors are going to be rented out to Masters Week tenants.
    As for the sales of the electric cars, which are actually licensed as motorcycles, he said most of his customers are coming from out of town. A credit card rewards program just bought three of them for when its customers want to cash in rewards points.

Someone nail down the tables and chairs

We keep bidding farewell to furniture businesses. Furniture General in downtown Augusta has left us.

Are you ready for Five Guys Burgers?

Burgers, bagels and subs coming to Washington Road

Another furniture store bids farewell

Ivan Allen Workspace is leaving Augusta

Local manufacturers doing well in big picture

The nameplate manufacturing companies in the Augusta region are still earning profits.