Michael Tringali is having trouble making payments on the massive real estate-related debt he accumulated with help from his former partner, Neil Mohamed Husani.
The 44-year-old developer and home builder missed several installments on a $7.3 million loan from Clearwater-based Mercantile Bank and a $4.9 million loan from Bradenton's Coast Bank, prompting both lenders to start foreclosing.
Mercantile is going after a 158-acre tract off Fruitville Road in eastern Sarasota County, while Coast Bank's target is 254 acres near Myakka City.
Tringali faces deadlines on three more loans, totaling nearly $34 million, payable in the next three months.
The pending foreclosures are the first sign of financial trouble resulting from the series of multimillion-dollar transactions by Husani and Tringali during the last two years -- deals that, to some observers, typified the excesses of the boom-boom real estate market of 2004-05.
They also represent the strongest example to date of the potential risks that the region's lenders put themselves in by assigning so much value to the properties when market prices were much lower.
Husani and Tringali inflated land values through property flips. They then used values that were way above what the market was paying to get bank loans that not only covered the original cost of the land but provided Tringali with more money to finance development.
Despite his current problems, Tringali believes he will emerge with his assets intact.
"I'm working diligently with all the banks to get the loans refinanced and extended with interest reserves," he said. "I am very confident that we are going to work out a solution."
Husani left the country in March after the FBI began investigating the presentation of false documents to at least one bank that lent Tringali money.
Though Tringali says he knows nothing about the false documents, he is suffering the consequences of his relationship with his former partner.
Attempts to sell his land to other developers or to get more financing have fallen through. In the meantime, Tringali has not been able to sell houses fast enough to pay a debt that now amounts to nearly $87 million.
The ones most to blame for the situation are the banks that lent Tringali all that money, says Jack McCabe, a real estate industry consultant based in Deerfield Beach.
They should have known better, especially because Tringali had been developing land and building houses in Southwest Florida for only two years before he applied for tens of millions of dollars in loans, McCabe said.
"I don't know of any other builder in the state that got that kind of credit with minimal assets and experience," McCabe said.
"He is a perfect example of the recklessness on the part of developers, appraisers and bankers that permeated the recent housing boom."
Bankers, which made huge profits during the rising real estate market, now stand to lose millions because of "their over-overexuberant desire to ever increase their bottom lines," McCabe said.
The Husani factor
Tringali entered the Florida residential development business by buying 40 acres off Verna Bethany Road in Myakka City in 2002.
He did not have good credit at the time. It took him months to get financing. But the first phase of his Golden Verna development sold out quickly, allowing him to pay down his debt, open a line of credit from Bank of America and buy more land off Verna Bethany as well as lots in other parts of Manatee and Sarasota counties.
But when Tringali met Husani in May 2004, he abandoned his conservative approach to development and home building and went on a whirlwind buying spree.
Between July 2004 and January 2006, Husani spent $42 million for about 1,900 acres of land.
He then sold the property to Tringali in cashless transactions for $98 million, and Tringali used the high purchase prices and accompanying appraisals to obtain $83 million in loans from seven banks.
If real estate demand had remained strong, Tringali might have been able to keep making payments on this debt. But the market slowed dramatically in 2006, especially in the Myakka City area that is home to two of Tringali's active developments, Golden Verna and Steeplechase.
"It's been a horrible year," said Jim Schmitt, a Realtor who formerly worked for Tringali's real estate company, La Vista Homes. "There are so many homes on the market."
More than a dozen customers have opted out of contracts, causing Tringali's inventory of unsold homes at Golden Verna to swell to 19.
"The big hook was that they were only asking for $2,500 deposits for houses," said Mark Pierson, who bought several homes in Golden Verna. "Now everyone has gotten buyer's remorse. Mike is sitting on a bunch of houses and the market is dead."
In spite of market conditions, Tringali has managed to sell 16 homes at Golden Verna since May, raising $5.3 million. Together with bank reserves he set up when he negotiated loans, Tringali was able to keep making interest payments through August.
But Tringali missed the September and October payments on his $7.3 million loan from Mercantile, prompting the bank to begin foreclosure proceedings Oct. 24.
A month later, Coast Bank began foreclosure proceedings after Tringali missed payments on a $4.9 million loan.
Last week, Tringali also faced a deadline on a $3 million line of credit from Bank of America originally due in July.
Another $14.5 million loan from Orion Bank is payable Dec. 30, while a $16.25 million loan from Fifth Third comes due on Jan. 12.
Representatives from the banks declined to comment, citing client confidentiality. But Tringali said he should be able to pay the Bank of America loan, and he is negotiating with both Mercantile and Orion.
"It's a matter of staying power," Tringali said. "The banks are working with me. They understand what the market is doing."
As to the Fifth Third loan, Tringali said he has a contract to sell land on Tamiami Trail in downtown Sarasota, where he and two partners had planned to build a $125 million condo tower. The deal is expected to close before the end of the year and the proceeds will be used to repay the bank, Tringali said.
Other problems
Even as Tringali struggles to renegotiate his debt, he is facing other problems at his Golden Verna and Steeplechase developments.
Residents at Golden Verna are worried that Tringali is not going to have enough money to build the clubhouse and pool he promised.
"There's a lot of very unhappy people out here," said Larry Bartgis, who owns a Golden Verna house. "They charge us $500 a year for a pool and it hasn't been built yet. That's not right."
Tringali says construction delays are not entirely his fault. He did not realize that the clubhouse and pool required a commercial permit, and he did not expect to have to make as many revisions to his plans.
"I know they want a clubhouse and believe me I want to give it to them," Tringali said. "We have the money set aside. We are just waiting for the permit."
Manatee County planner Patricia Allen said permits could be granted by the end of the year.
Tringali thinks county approvals for his 183-lot Steeplechase subdivision will come through at the start of 2007.
When that happens, he will be able to start selling the lots and recouping the hundreds of thousands of dollars he has spent to build roads and extend water lines.
So far, the delays have caused three builders -- Avalon Homes, Mark Cahill Homes and Eslinger Homes -- to either postpone or cancel their plans to build in the subdivision.
These builders want projects where they can begin building right away, said Mary Smedley, who is the head of sales for Tringali's La Vista Homes.
"It's a soft market and they don't want customer deposits sitting around," she said.
Tringali remains confident that the market will pick up once home buyers realize the values he is offering.
"In the long run, the market will turn around. Don't forget that baby boomers want to move here and they will have to have somewhere to live."
Tringali's bank debt
Mercantile Bank:$7.28 million in foreclosure
Bank of America: $3 million due Nov. 21.
Orion Bank: $14.5 million due Dec. 30.
Fifth Third Bank: $16.25 million due Jan. 12, 2007.
Signature Bank: $2.99 million due May 22, 2007.
Coast Bank: $4.9 million in foreclosure.
BankAtlantic: $28.6 million, due date unknown.
Wachovia Bank: $9.3 million, due date unknown.
Total: $86.8 million
Source: Sarasota and Manatee county court records
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