Mountain Real Estate Capital Acquires and Restructures Note on 270-Acre Master Plan

Torrance, CA – February 15, 2011 – (RealEstateRama) — Charlotte-based Mountain Real Estate Capital (MREC) recently closed another acquisition: a $20 million note held by CommunityOne Bank of Asheboro, N.C., which is secured by the Kellswater Bridge community in Kannapolis, N.C.  MREC also worked with the current developer to restructure the debt and allow for a smooth transition of ownership. MREC will team with Raleigh-based LStar Land as its co-developer of the project. MREC and LStar plan to reposition sections of the project and accelerate development and sales to qualified national and local homebuilders.

Kellswater Bridge is a 270-acre master-planned community consisting of 245 finished  or partially finished homesites and entitlement for at least another 400 lots in future phases. Approximately 60 homes have been built in the community.

“I was very pleased to see how smoothly our team and CommunityOne worked together to overcome some complex issues in this transaction, including title complications. We also worked out a tri-party agreement with the developer that was to everyone’s benefit,” states MREC’s Chief Executive Officer Peter Fioretti. “Recently we have been actively buying non-performing notes in the Carolinas and expect that this transaction will be one of several more with CommunityOne. In fact, Kellswater was one of three North Carolina assets we acquired from banks recently – the others being a waterfront community in Wilmington and a mountainside community in Asheville. These three projects together contain approximately 1,000 lots, which we will sell to or venture with select private and public homebuilders over the next five years. Along with two more sizable developments in the Northeast and California that we recently acquired, projected sales of these five recent acquisitions a  re approximately $160 million.”

MREC had worked for weeks to properly structure this acquisition with Kellswater Bridge’s developer and with CommunityOne.  The restructure provided the developer relief on its note obligations in exchange for the developer’s cooperation in MREC’s effort to invest new capital and accelerate the development and homebuilding in the project.  As a result of the restructuring, the community’s homeowners and builders will also benefit from MREC’s substantial capital commitment to the project.

“Our group is extremely proud to have developed this truly unique community, but we wanted to switch our focus to our homebuilding operation. We are very pleased that MREC worked with us and our bank and is committing substantial capital to continue and enhance the development,” explains George Kiser, member of the development group and franchise owner of Arthur Rutenberg Homes. “As a result of this reorganization, we now can commit to build additional models in Kellswater Bridge exhibiting the exclusive quality and lifestyle of custom housing offered by Arthur Rutenberg Homes.”

MREC is organized to invest $1 billion in bank REO/NPL with a focus on residential development projects to be either acquired or restructured/recapitalized for existing borrowers. In the last 10 months, MREC acquired more than $630 million of loans from 20 different banks. These NPL/REO acquisitions totaled approximately 8,000 lots plus another 7,500 acres of developable land. Its nationwide team of investment managers and local development and builder partners enabled MREC to quickly close these REO/NPL transactions.

“Kellswater Bridge is exactly the type of restructure opportunity we love: great property in a great location that got caught in the downturn but will excel once financially repositioned,” comments MREC’s Chief Investment Officer Arthur Nevid, who heads the company’s bank portfolio acquisition program based in Charlotte. “It also helps to have a strong working relationship with the bank like we do with CommunityOne, as well as support from our local and national homebuilder relationships to jumpstart the revitalized project. We are extremely excited to work with all of them on this opportunity.”

MREC’s homebuilder joint venture program is based out of its Minneapolis office. The national origination team has additional offices in Atlanta, Los Angeles, Richmond, Va. and Newport Beach, Calif. Most of the group is comprised of former bank REO managers who had been responsible for the management and disposition of 46,000 lots and homes valued at more than $2 billion.

About Mountain Real Estate Group:
The Mountain Real Estate Group is focused on expanding its acquisition program by purchasing large portfolios and NPL/REO assets direct from banks. Additionally, the group provides capital through flexible debt arrangements, joint purchases, and restructure of current debt to its builder/developer/investor partners. Mountain’s equity fund is positioned to invest up to $1 billion in these types of opportunities.

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