By Andy Owens
aowens@scbiznews.com
Published Sept. 8, 2009

The major investor in the Noisette Co.’s redevelopment in North Charleston posted a $1.6 billion loss last quarter and said it might file for bankruptcy, according to a report released Sept. 2.

For some time, Wall Street analysts have been warning about Capmark Financial Group’s instability based on its commercial real estate holdings. The company is one of the largest lenders for commercial property, a sector that has been increasingly hurt by the economy and the devaluation of mortgage-backed assets.

In June, Capmark’s real estate division, Capmark Finance Inc., filed a foreclosure lawsuit against Noisette Co.’s $23.8 million loan. The move took Noisette officials by surprise because they were in talks to renegotiate the loan. The company’s note with Capmark expired in August, and “the company was unwilling to extend the note” Noisette said in a statement.

Two other loan companies joined Capmark in filing the foreclosure notice against Navy Yard at Noisette LLC in the Charleston County Court of Common Pleas. The companies own three separate notes backing 240 acres of Noisette’s 340-acre development project on the former Navy base in North Charleston.

Noisette is planning a sustainable community of homes and businesses on the base’s northern end.

Capmark said last week in a note to investors that the economy had riddled its portfolio with holes and that cash has been pouring out for months. According to Capmark’s quarterly filing, the company lost $2.3 billion for the first six months of 2009, compared to $201 million in the first six months of 2008.

A decrease in the financial and capital markets, a devaluing of its loans held for sale and a drop in its real estate and investment portfolios have left the company looking for other options. The company told investors that the company was considering bankruptcy or the sale of parts of the business, including the mortgage banking division.

The day Capmark released its quarterly report, The Wall Street Journal reported the company was in talks about a possible takeover of its mortgage banking operations by a company owned by Berkshire Hathaway.

“The company has been in discussions with its lenders and the representatives of a number of senior noteholders regarding a restructuring of its primary debt obligations,” Capmark said in a note to investors.

“The company’s management believes that, because of the impact of the potential future losses on the company’s financial condition and the uncertainty regarding the company’s ability to restructure its debt, substantial doubt exists about the company’s ability to continue as a going concern,” the report said.

At $23.8 million, Noisette’s loan is a relatively small part of Capmark’s portfolio of mortgage-backed investments. Capmark reported that, as of June 30, it has $3.2 billion in loans held for sale and $7.6 billion in loans held for investment.