Comstock Homebuilding, Keybank agree to secured loan modifications

By Caroline Salls

Pittsburgh, Nov. 2 - Comstock Homebuilding Cos., Inc. has entered into a loan modification with Keybank NA, completing its efforts to modify all of the secured loans that the company has guaranteed, according to a news release.

Comstock said the loan modification amends an existing loan with a $22.8 million outstanding principal balance secured by the company's Eclipse condominium project and the company's planned Station View townhouse project.

"The agreement reached with Keybank provides us with an immediate cash infusion and gets us very close to completing our plan for stabilizing Comstock," chairman and chief executive officer Christopher Clemente said in the release.

"These recent accomplishments and continuing signs that the market downturn is easing in the Washington, D.C. metropolitan area gives us reason to once again be optimistic about our future."

The amendment will immediately provide Comstock with improved operating cash flow from sales at the two properties, the release said.

According to the release, the modification increases the cash flow available to Comstock through reduced principal payments required by Keybank as condominium units are settled at the Eclipse project and through the sale of the Station View project land.

The modification also reduces the curtailment requirement to 85% of the net sales price of the Eclipse condominium units from 100%, providing Comstock with cash equal to 15% of the net sales price as each condominium unit is delivered.

The company said the loan modification will be applied retroactively to all settlements occurring on or after July 1, resulting in an immediate cash infusion to Comstock.

In addition, the modification allows for continued receipt by Comstock of 15% of the net sales price of Eclipse condominium units, provided that Comstock satisfies conditions including meeting a minimum sales requirement of nine units per quarter on a cumulative basis and satisfies other conditions related to outstanding unsecured debt.

Comstock said it also has entered into a contingent contract covering the sale of the Station View land and expects that, provided the conditions of sale are met, the sale will close in the first quarter of 2010.

Also, the modification reduces the curtailment requirement applicable to the Station View project; providing for the payment of outstanding unsecured debts of the company from the sale proceeds generated through the sale of the Station View land and thereafter reducing the curtailment requirement to 85% of the net sales price from 100%.

The curtailment reduction is subject to a minimum release price to be paid to the lender.

Interest adjustment

In exchange for the modified terms, Comstock said it has agreed to adjust the interest rate to the higher of Libor plus 500 basis points or the Prime rate plus 200 bps, subject to a 2% Libor floor.

The company said the interest reserve provision of the loan was maintained, providing Comstock a means for payment of debt service on the loan as modified without requiring operating cash flow to cover interest expenses.

Comstock is a Reston, Va.-based production homebuilder.

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