January 12, 2009 - Tarragon Corporation, New York NY

Tarragon Files for Chapter 11 as Luxury-Market Bets Sour

Real-estate developer Tarragon Corp. filed for Chapter 11 bankruptcy protection Monday amid falling sales and a sharp downturn in the housing market

Tarragon Files for Chapter 11 as Luxury-Market Bets Sour

Real-estate developer Tarragon Corp. filed for Chapter 11 bankruptcy protection Monday amid falling sales and a sharp downturn in the housing market.

Tarragon's bankruptcy filing followed a number of ill-timed real-estate deals, including a big bet on the south Florida condo market. The developer's plans to buy rental apartments at high prices, and convert them to luxury condominiums flopped when buyers failed to materialize and renters fled.

Chief Executive William S. Friedman acknowledged that management had failed to exit the Florida condo market soon enough, but he blamed primarily the credit crunch for the company's problems. The "real estate business is a little bit like an ocean liner and you cannot stop on a dime," he said in an interview.

Tarragon, based in New York, owns 11,700 rental apartments and had been developing 3,800 urban condos and houses. The builder focused on high-density developments in urban areas in the Northeast, Texas, Tennessee and Florida, a market particularly hard-hit by the U.S. housing crisis.

Tarragon's inability to raise new financing prompted questions about the developer's viability when the credit crunch first seized markets 18 months ago. In November, Tarragon disclosed it was considering a bankruptcy filing after negotiating a restructuring agreement with its noteholders. Under the deal, the noteholders, who hold $125 million in notes, agreed to refrain from enforcing a default through June 30.

Original Story - Wall Street Journal