From the Record:
New Jersey is the key to Tarragon Corp.’s survival, the real estate development company’s top executive says.
Tarragon has been slammed by the sinking real estate and credit markets, forcing the Manhattan-based company to default on payments to vendors and lenders.
Its market value has plummeted from $287 million to $16.4 million in just two months. Tarragon stock, which sold for more than $10 a share in mid-June, closed Tuesday at 57 cents a share, down 5 cents.
Even so, the company remains “extremely hopeful” it can avoid bankruptcy, William Friedman, its chairman and chief executive, said in an interview Tuesday with The Record.
It all depends on New Jersey, where the company has three major projects under way, he said. “I think we have enough equity in our New Jersey and Connecticut properties. That will save the day.”
Tarragon is working with its lenders “and I’m hopeful we’ll have a successful outcome, subject to incredible conditions in credit markets that are affecting a lot of companies,” he said. “We expect over the next six to eight weeks we’re going to have a number of positive announcements.”
Projects in the state — including a mixed-use development in Hoboken and condominiums in Edgewater and Palisades Park — are already a “significant part of our business,” he said.
“In the future, they will become even more significant,” he said. “The growth we see is in long-term development projects in New Jersey.”
Tarragon is cutting back on its ventures in Florida, where the “accelerated deterioration of the homebuilding industry” has hit the company hard.
“The market in New Jersey has been our friend; The market in Florida has been from hunger,” Friedman said. “Market conditions have been very slow for two years, and are constantly getting worse. At the time the Florida slowdown started, it represented 80 percent of our business.. Now it’s down to less than 50 percent.”
Tarragon has never had an unprofitable project in New Jersey, he said. “Everything we are working on now looks like it’s going to be successful, from the standpoint of the final product to the profit and loss for the company.”
A big difference in the two markets is that Tarragon’s New Jersey projects make financial sense either as rentals or condominiums. But the Florida condominium properties — super luxury apartments — can’t be profitable as rentals, he said.
Despite the financial problems, work continues on projects that are under way, he said.