Developer gambled, gobbled up property

In late 2007, while the real estate market in Florida was busy falling apart, one developer rolled the dice.

John Ryan's Metro Development Group started buying up land all over Florida - much of it on the Suncoast, including Pasco County. That December, Tampa-based Metro bought 8,300 home sites from struggling homebuilder Lennar. A month later, it gobbled up another 1,000 home sites from M/I Homes in Cypress Creek in Ruskin.

By early 2008, Metro controlled 30,000 home sites in Florida. Now, 9,000 of Ryan's home sites are tangled up in foreclosure and in the hands of a court-appointed receiver.

Ryan founded Metro Development in 2003, just as the market was taking off. The son of a prominent Canadian developer, Ryan saw his father's business involved in litigation during the housing slump of the mid-1990s.

Ryan grew his business from a $20 million a year to $200 million behemoth in three years. His company was involved in developing nearly 60 projects throughout central Florida.

By the time Metro completed the Cypress Creek acquisition, the state's real estate market was well into its historic collapse and builders such Lennar, which had ventured into land development, needed a cash infusion.

Metro was rolling in money. The company had revolving lines of credit from five different banks to the tune of $175 million, and it had just formed a joint venture with D.E. Shaw Co., one of the world's largest hedge funds, that backed the Lennar and M/I deals with $250 million.

At the time of the deal, Metro Vice President Rob Ahrens said the Lennar deal was structured so the developer could hold onto the property for a year or more, until the market improved. In an e-mail to The Tampa Tribune, Ryan wrote that the company is prepared to wait longer, if needed.

"Our 2007 purchases were made as part of a long-term strategy," he wrote. Last year's credit crisis pushed the recovery out longer than expected, "but not to the detriment of our purchases."

While the projects purchased with the Shaw backing are still solvent, everything else Metro touched has fallen apart.

All five of the lenders initiated foreclosure actions against The Ryan Group in October 2008, saying Metro and dozens of its subsidiaries had defaulted on the credit agreement.

Metro had stopped making payments in June.

Wachovia was on the hook for $80 million. Fifth-Third Bank was due $40 million. Everbank and Raymond James Bank were out $20 million each; and Bank of America took on the final $15 million debt when it bought LaSalle Bank.

In May, Metro agreed to put its holdings in 45 different communities in four counties in receivership.

Nearly 20 communities in Hillsborough County are affected. Among them are:

•Kings Lake, a town house development in Gibsonton.

•Summerfield and South Fork in Riverview.

•Tremont at Bay Park, a Ruskin community, where Metro still owns 89 lots.

•The Venetian, another Ruskin community, where Metro owns 17 lots.

Cypress Creek, financed by the joint venture, is not affected. Neither is Epperson Ranch, a massive 3,900-home development planned for Wesley Chapel.

It is scheduled for completion in 2017 and recently won approval for a 243-acre town center on Curley Road.

But Pasco County is home to another 10 MDG communities in various stages of development that now are in receivership.

Some communities, such as Serengeti, in the Shady Hills area, are well under way.

Others, such as the former Gore Dairy property, in Zephyrhills, remain untouched.

Then there are the hybrids, like Hidden River on Chancey Road, in Zephyrhills. MDG already put in the roads, utilities and streetlights for the 325-home subdivision, but the home lots have been fenced off with barbed wire so the property could retain its agricultural use and less expensive tax status.

Ryan said he could not speculate on the future of any of the communities now in receivership, but he vowed that Metro would survive "this unprecedented downturn."

"This market has crushed seemingly impenetrable companies nationwide and recently brought down icons of real estate in the Tampa Bay area," he wrote. "It's a humbling experience."

Jim Harvey is president of Kolter Land Partners, which acquires and completes failed real estate developments. He said Metro bit off more than it could chew. "They were bullish when the market was sky high, and they came back into the market too early," he said.

Still, many of the abandoned projects probably will be sold and eventually completed, he predicts.

"The ones that have developed lots will get consumed over the next three years," he said. "And the stuff that's still raw land, even if it's fully permitted, the timing on that is so unclear as to be unknowable."

Tony Polito, who heads MetroStudy's Tampa division, said the local market has an oversupply of developed lots and historically low demand.

"When the market rebounds depends on the economy in general, as well as Tampa's job market and unemployment rate," he said.

"A lot depends on the baby boomers. In two years, the first baby boomers will hit retirement age. It's possible that the price correction in the last couple of years has put us back in line with our historic price levels. That makes the Tampa market an affordable option again, and could create demand for the next 20 years."