Rhodes could keep golf course

The reorganization plan for the bankrupt Rhodes Cos.' 32 related companies gives developer Jim Rhodes an option to buy the Rhodes Ranch Golf Course for $5.9 million after eight years, which could leave the course in limbo in the meantime, analysts say.

The plan will leave the golf course's creditors, who will run the facility, with little incentive to make major improvements because the price will be locked in, according to a real estate analyst, who spoke on condition of anonymity.

A banker, however, suggested the creditors will keep the course in good condition so that they have no difficulty selling it to Rhodes.

Although another party could buy the course, Rhodes then could use his option to force the sale of the property to him.

The creditors also have an option to require Rhodes to buy the golf course for $5.9 million in between four and eight years if they give Rhodes one-year notice. A real estate executive, who asked not to be identified, estimated the course to be worth $8 million.

A committee representing first lien creditors, including Credit Suisse, on Sept. 25 filed the plan of reorganization for the Rhodes Cos. The planenables creditors to recover assets that secured some of the $500 million owed by the company.

Under the reorganization plan, creditors would take ownership of most of Rhodes homebuilding assets in Southern Nevada, including Rhodes Ranch in southwest Las Vegas and Tuscany Residential Village in southeast Las Vegas.

Rhodes will retain ownership of key homebuilding assets in Arizona, including Pravada, a 1,312-acre development near Kingman.

Rather than sell real estate assets in Nevada, however, creditors intend to own and operate them, based on the conclusion that the assets have more value as part of an ongoing business. A board of directors appointed by the first lien committee will oversee management and operation of Rhodes Homes.

Rhodes Ranch has 314 finished lots available for sale and 1,993 lots awaiting development.

Tuscany has 350 finished but unsold lots and 559 partially developed lots.

Both communities are built around a Ted Robinson-designed 18-hole golf courses.

It's unclear what company the creditors might contract with to build out the Nevada properties.

Trade creditors can expect between $500,000 to $1.5 million cash if the reorganization plan is approved.

"This agreement was reached following extensive and positive negotiations between the main constituents," Rhodes, founder and president of Rhodes Homes, said in a statement. "Our consistent focus was to create a solution that would provide the best results for current homeowners, that will keep people employed building new homes, and that will ensure that trade claims will be paid. We accomplished that."

The debtor's financial problems are a symptom of Southern Nevada's downturn, which includes an oversupply of houses, thousands of homeowners who cannot make mortgage payments, 13 percent unemployment and a slump in tourism.

Since the Rhodes Cos. were founded in 1988, the company has developed 40 communities, built more than 6,000 homes in the Las Vegas area and generated $2.4 billion in revenues, papers filed in bankruptcy court show.

Bankruptcy Judge Linda Riegle today will be asked to take the first steps toward confirming a reorganization plan.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.