Memorandum April 2009
To the owners, friends and staff members of the Terramesa Resorts,
The recent economic meltdown has affected many resorts. The properties of the Terramesa MDR Resorts LP are not immune from these unprecedented market forces. We are increasing our communications with our investors during this time of volatility as we navigate some significant challenges. We are persevering and will continue to do so on behalf of our property owners, equity investors, lenders, professionals, staff, vendors and the communities we so enjoy building together.
We invested in the Centex resorts at good price points and we believe these properties will survive the downturn and emerge with solid performance relative to other similar resorts. This said, it is not new information to recognize that the market for second homes is lagging. In spite of the market, our sales teams are still seeing activity and interest in the properties. As positive as this news is, the sales progress to date has not kept pace with the original business plan. We believe this is a short-term challenge that we can overcome. Specifically, we are working together to renegotiate with our senior and mezzanine lenders to restructure the loans underpinning our investments.
While our conversations with all lenders involved are collaborative and constructive, it is possible that some parties will take steps involving various types of notices and will probably involve their legal counsel. These negotiations will likely happen behind the scenes, but some may surface publicly. This, while alarming, is a normal step in the process of restructuring as the lenders retrench their positions. The banks and mezzanine lender have all indicated a willingness to work with us to restructure and move forward together. We, along with our investors and lenders, are committed to overcoming these challenges.
In light of the economic environment and slow sales, we will be implementing land development reductions in budgets and staffing over the next two to three weeks. It is important to note that we will be continuing to serve our owners with hospitality services and amenities. While we will be evaluating the hospitality budgets, we don’t currently anticipate making significant changes.
Our resort communities have proven to be unique and continue to be desired by discerning resort property owners in spite of the current economic conditions. We expect our resorts to continue to operate with excellence and we’ll share more information as we move forward.
Sincerely,
Terramesa Resort Properties
