For two years, David Atkins has been trying to persuade the city to annex 200 acres on the eastern border, prime real estate where Stadium Boulevard will be extended to Interstate 70.
On Monday, the City Council finally agreed and gave Atkins access to city infrastructure in an area poised for growth, which makes the land some of the most valuable out of the hundreds of acres he owns in Boone County.
But for Atkins, the victory came too late.
During the past several months, Atkins has watched his portfolio unravel. He’s already sold some property at a loss to pay creditors, and he’s struggling to hold onto the land and buildings he owns throughout the Midwest.
In late July, Atkins lost most of the commercial property known as Trade Wind Park, located about a mile east of the Richland Road tracts, after he and partner Paxton Schneider deeded a little more than 110 acres to Premier Bank and its real estate holding company in lieu of foreclosure. In early November, M&I Bank of Kansas City foreclosed on another tract in the development.
Atkins said he expects he will have to sell his remaining property and many of the apartment complexes he owns in Missouri and surrounding states.
He is being sued for late payments by vendors and lenders. The number of people he employed at the properties he owned and at his business, Alexander Forrest Investments, has fallen from a height of 200 to about 50.
Atkins said he, like almost everyone in the speculative real estate business, could not foresee how bad things got and how fast it could happen.
“We were taking speculative risk based on over a decade of experience,” he said.
But the collapse of the housing market, the tightening of credit markets and the precipitous drop in demand as people lost jobs and cut back on spending ultimately doomed many of his investments.
After once owning apartments in eight Midwestern states and hundreds of acres of land in the Columbia area, Atkins doesn’t expect to have much left by the time he finishes paying back his lenders. The land he still owns in the Columbia area will have to be sold at a loss, he said.
Atkins said he hopes the annexation and rezoning of his Richland Road land will make the property easier to market, but he believes some opportunities sailed by during the long, contentious rezoning.
“It’s going to need to be sold,” Atkins said. “My hope is we can come up with enough money to pay the lender off.”
Rather than investing, Atkins spends all of his time now trying to limit his losses. That his business is still in existence is a testament to the hard work of his staff and the diversity of his holdings, he said.
“There was a time when we had projects going in six different states,” Atkins said. “We did make some mistakes along the way, but we had a good run.”
Riding the wave
Atkins, 41, moved to Columbia from Phoenix in 1989 to attend MU. After finishing one semester, he decided to drop out and focus on real estate. He got into the business just as prices began to rise again after the property bust of the ’80s. He rode that wave until it crashed during the financial crisis.
“It was very similar to how it is now,” he said. “I was just on the other side.”
He began buying foreclosed houses and used the profits from rehabbing and selling them to buy distressed apartments. Much of his money came from revitalizing blighted apartment complexes in Kansas City, Arkansas, Kentucky and Tennessee.
Earlier this decade, he began speculating on land. At his height in Columbia, Atkins owned hundreds of acres around Boone County.
But when the financial crisis hit, Atkins was caught with a portfolio filled with speculative assets.
“My buyers disappeared,” Atkins said. “We went from 100 mph to zero in about three weeks.”
Tightened regulations forced banks to keep more capital to protect against losses. That reduced their overall lending and made them unable or unwilling to renew lines of credit.
“If the loan matures, and you can’t pay, one way or another those assets are going to be liquidated,” he said.
Big plans never materialized. Atkins had envisioned a large commercial development serving north Columbia on 38 acres he owns along Blue Ridge Road between Providence Road and Range Line Street. He set up a Transportation Development District there to help finance the project. National grocery store chain Kroger’s was even under contract to build a store on the development, he said.
“When the economy went sideways, they canceled their contract,” Atkins said.
After thinking he might have made it through the worst of the crisis in 2009, he “began to see the writing on the wall” earlier this year, he said.
Losing it all
Atkins’ troubles came to a head late this summer when he lost most of Trade Wind to Premier Bank. Boone County documents show he and Schneider opened a $2.4 million line of credit against 138 acres between Interstate 70 and Richland Road. They spent three years developing Trade Wind but in the end were only able to sell about 20 acres to a trucking company, a condo sales group and a retail developer.
In July, they deeded most of the unsold land back to Premier Bank and lost the rest in foreclosure last month. Providence Bank and First State Community Bank bought the bulk of Premier’s assets when regulators forced the lender to dissolve. But the Trade Wind land is among the “nonperforming” properties now controlled by the Federal Deposit Insurance Corporation.
Atkins said that whoever ends up owning the Trade Wind land, the shovel-ready industrial and commercial park will ultimately be a great asset for the community.
“I’m proud we had the vision to put it together,” he said. “It’s just unfortunate the economy took a turn such that we were unable to keep it.”
Atkins still owns about 15 acres on Clark Lane east of US Highway 63 next to Home Depot and Golden Corral. He will likely have to sell that land, he said.
In late August, he and his partners sold the tract of land on Business Loop 70 to grocery store chain Aldi’s at a “substantial loss,” he said.
Atkins and his partners are working on selling the 200-plus acres they own at the southwest corner of Route 163 and US 63. He had planned to build a residential development there to serve both Jefferson City and Columbia, he said.
“Everything that we’re selling will be sold at a humongous loss,” he said.
On top of trying to pay off his loans, Atkins said he is under “many” lawsuits currently and is struggling to repay his vendors.
Three October lawsuits against Atkins allege he owes nearly $18,000 to Crockett Engineering for professional services. According to documents filed in Boone County Court, the fees are from services provided in late 2008 and late 2009, mostly for the undeveloped tracts Atkins is now being forced to sell.
Crockett Engineering and its attorney declined to comment.
If there’s one bright spot, Atkins said, it’s that the apartment rental market is doing very well now. But any gains from those assets, and the assets themselves, will likely end up being short sold, he said.
Atkins said he does not plan on filing for bankruptcy because he and his partners should be able to repay more by working out deals and repayments with vendors. Still, when it’s all over, most of what he once owned will be gone, he said.
For someone who has lost close to everything, Atkins remains upbeat. After getting “caught up in the frenzy,” he said the whole experience has made him a better businessman and helped him grow as a person.
“I learned I have an enormous support network and a lot of friends,” Atkins said.
Still, there are a lot of fires to put out.
“I work many 12-hour days knowing full well that the result of my work is not going to be enough,” Atkins said.
He’s hopeful that during the next 18 months he can wind down his lender problems. After that, he wants to stay in the real estate business, but this time as a consultant and agent.
With his contacts in the apartment complex industry, he thinks he will be able to jump back into the game quickly. Already, he has rebranded Alexander Forrest Investments as AFI Property Management, which will be a service company rather than an equity-based business.
“One way or another, we hope to be doing what we’re good at,” Atkins said.
Everybody is going to get a little rain in life, Atkins said. He and his associates plan on starting over and using what they have learned from the ordeal.
“The next chapter is going to be great,” he said. “But I wouldn’t wish the experience on anyone.”Dec 10, 2010 BY JACOB BARKER