Investors, Receiver Tussle Over Proposed Sale Of $2B StoryBuilt Portfolio
Investors and creditors of troubled Austin-based developer StoryBuilt are fighting over how the firm’s tale will end.
A private equity firm and a well-connected Texas family are pushing back in court filings against a plan to sell all 28 of the developer’s properties in a bid to recover investor funds after the firm entered voluntary receivership earlier this month, The Real Deal reports.
Partners Group, a Swiss investment firm that invested in 17 StoryBuilt projects, said in a court filing that it was blindsided by an Oct. 9 announcement that the developer would sell its assets, per TRD. Partners, which has $142B under management and 20 offices worldwide, said the receiver implied in a press release that the properties were wholly owned by StoryBuilt when they are actually joint ventures.
The investment firm has contributed at least $180M to StoryBuilt developments, according to TRD.
Partners also alleged that the receiver failed to follow through on assurances that it would have advance notice that the properties were going up for sale and that it would be given an opportunity to comment on the marketing materials.
StoryBuilt, founded in 2009, has a portfolio of developments ranging from seven to more than 800 units in Austin, Dallas, Denver and Seattle. Its holdings include at least seven partially completed properties and three lots that have been approved for development but haven't begun construction.
“The press release, which was picked up by over twenty publications, created substantial confusion in the market,” Partners wrote in the filing, according to TRD. “The press release falsely indicated to the market that the properties, which are neither owned nor controlled by [StoryBuilt], were on the market in the receivership sale.”
Partners said it had received calls from interested buyers and concerned investors about the properties and demanded the receiver, Los Angeles-based Stapleton Group, publish a retraction that indicated StoryBuilt was merely selling its minority interest in the projects and not any direct real estate assets.
The firm also claims that the joint venture agreements at the properties require Partners to consent to the sale of StoryBuilt’s membership assets.
Partners and Stapleton declined Bisnow's requests for comment.
In a separate court filing, a Texas family that invested in a Dallas StoryBuilt development alleged that Stapleton's handling of the liquidation has put the brakes on a long-planned sale of one of its properties.
Former Texas House Speaker Tom Craddick, his son, Tommy, and his daughter, Christi, say that Stapleton’s plans to not immediately distribute proceeds from StoryBuilt asset sales threatens a $10.7M deal for a 36-home single-family development site in Dallas.
Dallas-based Stillwater Capital Investments sent a letter of intent in June to acquire the property under the condition that the Craddicks and another investor roll over around $4M that had already been invested in the project, the suit alleges, according to TRD.
The receiver’s plan to hold on to the money from a sale would prevent the investors from contributing the funds, which Stillwater said would cause it to walk away from the deal.
Stapleton is planning to hold the funds while it conducts forensic accounting following its discovery that StoryBuilt misused funds earmarked for specific projects as it fought for survival amid layoffs and lawsuits from investors and condo owners.
Problems at StoryBuilt first emerged in July after the company requested $10M from investors because of a “lack of liquidity,” the Austin Business Journal reported. The company said later that month that it was furloughing much of its staff and reorganizing its leadership before notifying staff in August that it would be laying off 137 employees.
StoryBuilt has rehired around 50 employees who were laid off in August to help facilitate the sale of its assets, according to a filing from the receiver, per TRD. The next hearing in the receivership is scheduled for Nov. 16.
