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The loan fix-it man
Attorney tries to negotiate rocky financial landscape
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Wade Beavers, with his wife Ree Beavers, looks over a property plat in his Green Street office. - photo by Tom Reed

Wade Beavers has been on both sides. He worked as an attorney representing developers in the go-go era of the 1990s.

He later joined a development firm as a top executive and saw the first signs of what has become a tumultuous time for commercial and residential development.

After leaving that firm in 2006, Beavers felt there was a legal niche that was not being served. He has opened a firm, Beavers Transaction Group, that specializes in negotiating arrangements for troubled development loans.

His clients include both developers and banks.

He said banks once sought to go after a developer's personal assets, including home, cars and personal items, to satisfy defaulted loans.

"The borrowers have signed personal guarantees that it is not just the assets of the company at stake, it's the personal assets of the owner of the company," Beavers said. "That's what drives the fear of personal devastation."

Beavers said in the middle of 2008, banks changed their strategy.

"The banks are starting to realize that the borrowers have put everything they own personally back into these companies, either as a reinvestment or trying to save the company."

He said he often tries to reach a settlement where a developer can keep his primary residence and basic vehicles.

Often gone are vacation homes, airplanes and motor homes that were the rewards of highly profitable ventures in time's past.

"Half of my work is for banks and half is for borrowers," he said. "As an attorney, I represent one side or the other and have to make sure that client's best interest is carried out."

Beavers said where he comes in is trying to reach a nonadversarial compromise that benefits both sides. "It's not a battle that either side is going to win," he said.

He said having an attorney often gives the borrower more credibility with the bank. That often takes intimidation off the table," he said.

When he represents banks, he said his background as a developer is useful. The borrower understands that I know his business," he said. "Having been on both sides of the table, it gives credibility to both sides."

Beavers said the number of existing projects that have viable on-going value is diminishing daily. Few residential projects can fund themselves going forward and an effort is made to salvage what is left.

He said bankruptcy is the option that both banks and borrowers are attempting to avoid.

"Bankruptcy is not in either party's best interest," he said. "A lot of what we try to do is avoiding the bankruptcy scenario and see if there is a way to salvage it where everybody ends up with the same or more than they do in bankruptcy, but do it outside that context."

He said most developers want to do the right thing. Many have spent the past two years selling off assets, robbing trust and college funds to put money back into a rapidly sinking operation.

"In the past 12 months, most borrowers have come to recognize they are putting water in a bucket slower than it is going out," he said. "They know they cannot save the company."

Beavers said the development landscape has changed dramatically from his days as a developer.

"In reasonably good markets, like Hall and Gwinnett counties, it was almost difficult to do a losing deal for 10 years. Because of that, everyone thought that was the alchemy source, the fountain of wealth and real estate can't lose," he said.

He said everyone tried to cash in. "Everybody wanted to take advantage of this low-risk, high-return game," he said. "In the long run, it never turns out that way ... there will always be downturns."

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