Yesterday I went to a fascinating presentation about a development rescued by townhouses. The original proposal for the community called Centra in Boca Raton, Florida was a mix of expensive 3-story townhouses and detached houses, but then 2008 happened and the respected developer, Stiles, found itself with no sales, a piece of land, and a $25M debt to Bank of America with a personal guarantee for $12.5M. The land appraised for $6M and Stiles' top priority was not to have to write a check for the other $6.5M. Stiles considered drastically changing the site plan to garden apartment buildings, but BoA did not want the delay of such change. So Stiles turned to Label & Co. to come up with an innovation, a similar site plan but with more density of a product familiar enough to sell but differentiated enough not to compete with foreclosed detached houses. The answer: moderately-priced, 2-story townhouses. But if Stiles was going to develop its way out of debt, it would need a construction loan, so BoA agreed to an additional $7.5M revolving loan. Currently, once Stiles has pre-sold a certain number of units, BoA releases the funds to build them ($48 PSF hard costs), and Stiles sells the units to pay down the construction loan and personal guarantee, while continuing to pre-sell units for the next phase. Stiles said during the presentation that it looks like it will be able to pay back all its obligations. (Stiles also said that, as buyers got comfortable with the 2-story unit, some asked for more space, so now Stiles is selling one of the 2-story models with an 3rd-floor, 800 SF "bonus room" and higher price.) I think that if Stiles could start over now, buying the land for $6M, it would be making an attractive return, so note to other developers: let's get started building more townhouses!