LIFE AFTER REYNOLDS: TERRY RUSSELL AND MIKE LANGELLA RESURFACE AS FRONTDOOR OPENS
By: John McManus
View original article at www.bigbuilderonline.com
Just like that, Terry Russell and Michael Langella are back in the saddle with a new company that will take the rampway through real estate advisory services right back into home building.
The two came of note as two of the executive-rank breakaways from the John Wieland Homes team in 2007, as the Southeast’s home building boom quickly busted. For the past three-plus years, they’ve been toiling under the Reynolds Signature Communities aegis, and now they’re hanging up a shingle of their own in this most opportunistic of moments before recovery actually takes hold.
Their new corporate aegis is FrontDoor Communities, and although they’re both based in Atlanta, the footprint of their eventual activities is the greater Southeast, with an emphasis on Florida and South Carolina.
Russell and Langella, you see, had been the nucleus of the go-vertical team at Reynolds Signature Properties’ Linger Longer Homes. When they joined on with the Reynolds Plantation team, they’d brought with them a strong tie with a rather vaunted financial services client with considerable interests in the high-end residential resort types of properties that Reynolds planned to develop in two northern Georgia golf-course retirement/resort communities, Achasta and Reynolds Plantation.
According to a series of reports about three weeks ago, developers of Reynolds Plantation were under duress to make a $45 million payment to impatient lenders in the weeks ahead.
The World Property Channel, a real estate information source, reported on Feb. 16.
According to the letter, signed by Reynolds Plantation Chairman Mercer Reynolds III, a group of banks is demanding a hasty payment of $45 million by April. The payment was requested while the development company was negotiating renewal of a line of credit.
In the letter, Reynolds says he and his cousin, Jamie Reynolds, had “pledged a number of additional assets (totaling approximately $60 million) to the banks,” but the banks still want the large payment in two months. The cost of construction of the amenities being sold is about $136 million, the letter says.
The Reynolds empire at Lake Oconee spans more than 14,000 acres and 90 miles of shoreline, comprised of three gated communities–Reynolds Plantation, The Landing, and Great Waters–a golf academy, and six golf courses, with a seventh on the drawing board. There are around 2,000 residences between the three communities.
The letter says the line of credit was used by Reynolds Plantation, Linger Longer Development Co., and its affiliates to buy land for further development of the ritzy subdivisions and golf courses that are near the Ritz Carlton Lodge, a popular destination for Atlantans.
Langella, who had been CFO at Linger Longer, says Reynolds successfully recapitalized since the emergency, but the recapitalization would “suck cash for an extended period of time, leaving no cash to move ahead with vertical.”
Hence, Russell and Langella’s exit from Reynolds. But the departure only opened the FrontDoor to new opportunities with some familiar backing.
Says Langella, “Terry and I had existing clients for real estate advisory services when we started at Reynolds and built the home building operations from scratch starting three years ago. Now, we’re continuing to do work for this client [a well-known real estate fund that happens to be 80% owners of a highly visible portfolio of upscale vacation and/or retirement-oriented master-planned communities in the Southeast that Langella requested not be mentioned at the moment].
“Each of these communities has a unique set of challenges that Terry and I represent a fair amount of value to address–ranging from a need to change the business model, to operations management, to finding ways to take costs out to reflect business realities today,” Langella tells Big Builder.
What’s more, there are thousands of home building lots across these master plans, and chances are pretty strong that Russell and Langella can make some sense of ways their client could “maximize the return” on those lots by building some homes.
That’s when FrontDoor Communities busts wide open for the next stretch of these two home builders’ careers.