Old Saban house once again under contract

The Highland Road estate that once belonged to former LSU football Coach Nick Saban is once again under contract and set to close by Nov. 15. Quita Cutrer, an agent with Burns & Co. who has the listing for the estate, says an out-of-town buyer plans to purchase the home and 15 acres behind the property that faces Burbank Drive. Cutrer says the buyer plans to keep the estate as a family home and have the adjoining land as "a big backyard." There had been speculation in the past that the adjoining property could be turned into an upscale subdivision. The 6,412-square-foot home, the 4.5 acres it sits on and the adjoining land have an asking price of $4.8 million. This is the second time this year the Saban estate has been under contract. A deal to sell the property on April 1 fell through because of financing problems. Cutrer says a new buyer is in line to buy the home. "I'm hoping it will close this time," she says. Jim Tanner bought the home for $2.75 million in 2005 after Saban left Baton Rouge for the NFL. Tanner then exchanged the property in December 2007 before buying the house back in April 2008 for $2.8 million.—Timothy Boone

B.R. home prices down slightly

A new report says Baton Rouge home prices dropped 0.41% in August from the year before. First American Core Logic says the local Home Price Index was down from August 2008, after a 0.8% increase in July. That local decrease is much better than the 10.1% drop reported in First American's national index in August. Louisiana's index was down 3.9% during the month. First American predicts U.S. home prices will hit bottom in March, because of the increasing number of homes entering the foreclosure process and the expiration of a tax credit for first time homebuyers -- although members of Congress are working to extend the credit into next year. By August 2010, First American projects the home price index will be up 4.6% nationally and 0.51% in Baton Rouge.

Mitsubishi site on the market

Now that Gerry Lane Enterprises has purchased the BIG Mitsubishi dealership and moved the business to Reiger Road, the site of the car lot is for sale. The six-acre site near Interstate 12 and Airline Highway has an asking price of $2.4 million and a lease of $20,000 a month, says Carmen Austin of Saurage Commercial Real Estate. Austin is marketing the property along with Hank Saurage. The site includes two buildings with nearly 24,400 square feet of space. Austin says the owner would consider subdividing the land. The site would be ideal for an auto body shop or a large equipment rental facility, she says.

Poll: Student housing gets good grades

Real Estate Weekly readers say the market for student housing is strong, with nearly half giving the sector an "A" or a "B.” Twenty percent say the demand for college student housing is an "A," while 29% gave the market a "B" and 23% handed out a "C." Eleven percent graded the market as a "D." Nearly 100 people participated in the survey.

This week's question: Do you expect Capital Region home sales to surpass 2009 levels in 2010?

Tom Cook: Magnolia Square closes lots

The TND known as Magnolia Square located in Central, developed by Nunnally Pollard Developers has closed on its first six lots. Three separate builders purchased two lots each at prices ranging from $60,000 to $63,000 each. Each builder will construct homes on the lots they purchased. One lot will be developed with a "showcase home" which will not be marketed for sale. The purpose of the showcase home purpose will be to set an example of what type construction will be taking place in Magnolia Square. The other lot will be improved with a home made available for sale. So, each builder will construct two homes, one available for sale and one to showcase the Magnolia Square concepts. The builders purchasing lots were Fetzer Properties of Louisiana, Rabalais Home and Spicer Construction. According to Jimmy Nunnally, one of the developers, the homes being constructed will immediately set the tone for the streetscape that the development is trying to achieve. Homes will have six-foot porches with balconies, rear alleyways and other features. The homes that will be made available for sale will range from 2,100 to 2,600 square feet and will be priced in the $285,000 to $360,000 range. All six lots have been sold in the first phase, which will consist of 79 lots. There are three additional lots that should close shortly. These three lots will be developed with custom homes. The pending sales are to individuals.

(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

Brian Andrews: FDIC issues statement on commercial real estate loan workouts

This past Friday afternoon, I was waiting for the weekly notices from the FDIC concerning bank failures (I really need to get some better hobbies) when I received instead a press release from the FDIC concerning commercial real estate loan workouts. The FDIC guidance was made on behalf of a larger group known as the Federal Financial Institutions Examination Council (FFIEC) which includes the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the FFIEC State Liaison Committee, which would include the Louisiana Office of Financial Institutions. So it looks like all of the bank regulators are on board with the workout policy statement.

The policy statement "stresses that performing loans, including those that have been renewed or restructured on reasonable modified terms, made to creditworthy borrowers will not be subject to adverse classification solely because the value of the underlying collateral declined" and "provides guidance to examiners, and financial institutions that are working with CRE borrowers who are experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties."

I believe this statement to be good news for bankers and borrowers struggling with marginally or underperforming projects and loans. The struggle for the borrowers is that some relief or restructure may be needed while the struggle for the bankers is fear that the bank regulators may criticize an institution for working with a borrower on restructuring a loan. Hopefully this guidance will allow the banks to work with borrowers under specific guidelines without fear of criticism.

The participating regulatory agencies "recognize that prudent loan workouts are often in the best interest of both financial institutions and borrowers, particularly during difficult economic conditions." This policy statement details risk-management practices for loan workouts that "support prudent and pragmatic credit and business decision-making within the framework of financial accuracy, transparency and timely loss recognition."

The press release promises that "financial institutions that implement prudent loan workout arrangements after performing comprehensive reviews of borrowers' financial conditions will not be subject to criticism for engaging in these efforts, even if the restructured loans have weaknesses that result in adverse credit classifications."

Given that many of us in the commercial real estate market are struggling with underperforming properties, and I mean that from both the banker and borrower sides, it may be good to look at the guidance in more depth. I will discuss the issue with bankers and borrowers and report back next week. If you just can't wait, click here to read the full document.

And I might suggest that you get some better hobbies as well.

(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)

Real estate recap: B.R. foreclosures still low ... City ranks second nationally for construction gains

Big increase may be due to improved information: U.S. foreclosures increased by 23% in the third quarter as the recession caused people to have trouble paying their house notes. One out of every 136 households received a foreclosure filing, according to RealtyTrac. Baton Rouge ranked 152nd out of 203 metro areas for foreclosures, with one filing per 375 homes. That's a 129% increase over the rate in the third quarter of 2008, but RealtyTrac notes the increase may not be as high because of improved collection data.

One of the few bright spots: The Capital Region was one of eight U.S. metro areas to add construction jobs since September 2008, according to a report released last week by the Associated General Contractors of America. There were 41,200 construction jobs in the Capital Region in September, 1% more than the 40,600 jobs in September 2008. Only Tulsa, Okla., added more construction jobs in the past year.