Builder Levitt reaches deal: Pact could affect area development

Dec 20, 2007 (The Sun News - McClatchy-Tribune Information Services via COMTEX) -- LEVW | charts | news | PowerRating -- Home builder Levitt and Sons made a deal with one of its lenders in the U.S. Bankruptcy Court in Florida on Wednesday that could affect homes in the company's unfinished Murrells Inlet development.

Levitt and Sons reached an agreement with Wachovia Bank, which loaned the company money to secure lots in Georgia, Florida and South Carolina, including the Murrells Inlet retirement community Seasons at Prince Creek West, according to Levitt Corp. spokesman Michael Freitag.

The effect Wednesday's hearing will have on Seasons -- where construction stopped in October and houses sit unfinished -- isn't yet known.

Levitt and Sons "certainly has reached some kind of agreement with Wachovia that will allow it to sell at least some of the homes that were part of the Wachovia collateral," Freitag said.

Since filing for Chapter 11 bankruptcy on Nov. 9, Levitt has tried to work out a financing deal with Wachovia that would allow Levitt to finish and sell 2,800 lots in the three states.

The Fort Lauderdale, Fla.-based home builder, known for building the famed Levittown project on Long Island 60 years ago, was hit by the downturn in the housing market this year.

Construction halted at its Seasons development in Murrells Inlet in October, leaving many plots vacant or in midconstruction. Residents worry that plans to build 460 houses and amenities, including a 27,000-square-foot clubhouse, won't materialize.

Pat Zarriello of New Jersey, who has invested $45,000 in a Seasons house that remains unfinished, worries that could cause home values to drop.

"My biggest concern is that the homes have been devalued, and I'm concerned about what the closing price is going to be. I think they need to take quite a bit off," she said.

She said she has mixed feelings about Wednesday's agreement with Wachovia.

She wants all the amenities to be finished before closing on her home, which was supposed to happen in November. Now she's unsure when that will happen.

Levitt and Sons' only other S.C. development in Hilton Head Island was not part of Wednesday's dealings, Freitag said.

"Hilton Head is an unusual situation where that property is owned now by either Levitt Corp. directly or Core Communities, part of the Levitt family," Freitag said.

He expects that project, Magnolia Walk at Tradition, will finish being developed.

Levitt and Sons was one of many builders hit by the downturn in the home-building industry. When it couldn't restructure its debt, it filed for bankruptcy.

In November, Levitt and Sons got approval from the court to walk away from about 4,000 residential lots that served as collateral on loans from two other lenders. The court's ruling allowed Bank of America and KeyBank, if they wished, to begin legal proceedings to get title to the lots, located in central and north Florida.

McClatchy Newspapers contributed to this report.

Contact JESSICA FOSTER at 626-0351 or jfoster@thesunnews.com.

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