A year after an Austin-based developer StoryBuilt fell apart, most of its properties remain in limbo and appear set to stay there for years.
The infill housing developer, operating as PSW Real Estate LLC, laid off most of its staff in a sudden move last summer. It filed for bankruptcy and a receiver was appointed to handle the sale of its assets. It has also faced numerous lawsuits from investors and condo owners and investigations by the SEC and FBI.
Most of the 28 properties it had in development haven’t been sold, and the receivership could drag on for years, the Austin Business Journal reported.
The Stapleton Group, headed by Mike Bergthold, is the receiver attempting to address the developer’s financial issues, resolve outstanding debts and manage its development projects.
As of May 31, StoryBuilt still held interests in four developments and 15 joint ventures, primarily in Austin, Seattle, Denver and Dallas. The Charley, Lucy and North Bluff project in Austin, and a project in Dallas called Jolene, have secured debts totaling over $62 million. A reveal deal to sell the Charley development fell through.
Despite challenges, construction has resumed on some projects, with 11 homes delivered to buyers since last year. The receivership has also repaid over $56 million to secured lenders and processed 1,270 claims from investors and creditors.
The first phase of the receivership focused on completing and selling remaining single-family developments and providing the court with a forensic accounting report and recovery estimate.
In March, the forensic report revealed several financial irregularities by StoryBuilt. The red flags include the developer paying a 35 percent return to investors on a loss-making project, inflating real estate values to attract more investments, and filing incorrect tax returns, according to the report.
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The receivership’s second phase, which may take years, will involve managing claims, monitoring joint ventures and distributing cash based on a court-approved plan.
StoryBuilt’s prolonged financial woes and complex receivership process underscore the broader challenges facing the infill housing market as the company continues to navigate legal and financial hurdles to stabilize its operations and fulfill its obligations.
— Andrew Terrell