Developers Research Announcement

Press Release

New Real Estate Crisis on the Horizon:  Land Holdings Across the Southern California May Go Into Foreclosure in 2008

Financial Institutions and Investors are Seeking Advice on What to Do with New Land Assets

IRVINE, Calif.- Jan. 2007 - Much attention has been paid to the fallout from the sub-prime market and subsequent credit crunch, but another real estate crisis looms on the horizon.

As new home sales and construction have come to a virtual standstill, builders and developers are increasingly unable or unwilling to make payments on idle land they purchased with loans during the real estate boom in Southern California. Today several big builders are finding themselves in a situation similar to many homeowners who can't pay their mortgage, and foreclosures on huge properties across the country are expected in the coming months.Developers Research, a consulting firm that analyzes the financial feasibility of real estate projects nationwide, recently has been approached by several developers, banks and institutional investors to help determine the current value of property and whether they should sell the land or hold onto it until the market recovers. "We're seeing a significant increase in the number of lenders and equity groups coming to us for advice on what their property is really worth," said Scot Oldham, executive vice president of Developers Research. "Most lenders don't have the time or the resources to evaluate the potential value of each of their real estate projects. It is surprising how often we find there are other achievable alternatives to the existing development plan - alternatives that are just as realistic and more profitable."Now that every development dollar counts and the new price of land is anyone's guess, it's not enough to get a traditional appraisal of property. What attracts businesses to Developers Research is their proprietary mathematical models (including algorithms and regression analysis) based on solid financial and accounting practices to compare development options that can save clients tens of millions of dollars on a project.

            "Traditional appraisals only look at the revenue side - this is what your property is worth. We understand that the cost side of things - how much money you have to spend to develop it - is just as important," said Barry Gross, president of Developers Research, who holds an MBA from Rutgers in accounting and finance. 

Gross, who also is a certified public accountant, reviews projects in light of the potential tax savings. For example, will the sale of land at a loss this year be offset by the tax savings, which can be applied to the previous two years.

"You have to look closely at all the different development, accounting and tax options to make the best decision," Gross said. "Too often, decision makers don't have all the information and end up leaving money on the table."

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Media Contact:

Anton Communications
Genevieve Anton
714-544-6503 

About Developers Research

Developers Research was formed in 1997. Its senior executives include experienced land developers and financial analysts. The company's staff of specialists has completed more than 7,000 assignments in 25 states throughout the country for more than 170 private and publicly held companies as well as local and regional governments. Developers Research is highly regarded for its proprietary analytical models and methods of evaluating value and risk associated with every facet of real estate acquisition, development and disposition.