iStar Financial to own Lower Magnolia Green

Apparently no one's in the market for a partially built, mixed-use development with half an 18-hole Jack Nicklaus golf course.

Lower Magnolia Green, an under-construction development in Chesterfield County planned for 3,550 homes and a mix of commercial uses on 1,898 acres, was auctioned off yesterday.

With no bidders, the project went back to the bank -- New York-based lender iStar Financial -- for the $52 million opening bid. They will assume ownership in a matter of days.

Of the 20 or so attendees at the auction, held on the lawn of the welcome center to the project at Woolridge and Otterdale roads, none offered up the $5 million cash deposit required to qualify.

"Fifty-two million dollars going once, $52 million going twice -- fair opportunity for any bids to be placed -- $52 million third and final time . . . sold back to the note holder," said Emmanuel D. Voces, a representative of the trustee's office, Samuel I. White P.C.

The lender two weeks ago declared the developer, Magnolia Green Development LLC, in default on its $96.9 million loan issued Jan. 5, 2007, foreclosing on the property.

"We are working to ensure a smooth transition to new ownership with the assistance of Magnolia Green Development," said Andrew G. Backman, senior vice president of investor relations and marketing with iStar. "Work has and will continue at the project as we expect to continue with the original plan for the development. We look forward to re-energizing the project going forward and have received a warm reception from homebuilders thus far."

Representatives from Magnolia Green Development did not return calls yesterday.

Voces said he was not surprised with the outcome.

"A $5 million deposit -- it's not small change. None of these guys here obviously wanted to take a risk. I don't know if they have the financing in these tight credit markets to be able to attain $52 million worth of loans," he said. "It's a moment of pure public interest."

Voces said only the undeveloped portions of the property -- including the half-built 18-hole Westham Golf Club -- were foreclosed on, and current occupants would not be affected.

"We hope we can change the story on this project," said R. Michael Dorsch, executive vice president for iStar.

Linda Iele, one of the 60 or so residents of the subdivision, said she wasn't worried about the future or the amenities the residents were promised.

"We're still pretty optimistic," she said catching up on yardwork at her home -- the only one on Hosta Lane -- off the 13th hole of the golf course, nine holes of which are to open this fall.

"Who the owner or developer will be, I don't know. But the county would be foolish to let this opportunity pass. Millions of dollars have been invested here," she said. "It's just a matter of time."

About 15 homes -- in the range of $300,000 to $1 million -- are already built or nearly completed as part of the first phase of development. The second phase hinges on the sale of Community Development Authority bonds to pay for transportation infrastructure.

The northern portion of Magnolia Green, where an additional 1,300 homes could be built in coming years, is owned and handled separately.

Contact Wesley P. Hester at (804) 649-6976 or .