Stan Thomas paid $209 million for a historic building near the Tower of London in 2006, saying he’d transform it into a seven-star boutique hotel.
Two years later, the Newnan-based developer offered a local government $90 million in cash and loans to widen a road near a 15,000-home project he’d proposed in Sarasota, Fla.
And this past March, he pledged his own money to help build a retractable roof stadium near land he controls close to the convention center in Orlando.
These were all signs of a well-capitalized developer riding the wave of the real estate boom -- and so confident in his ability to pull off massive projects that he’d risk hundreds of millions of his own dollars to get the ball rolling.
Last month, the wave crashed over Thomas. On Nov. 2, Thomas -- a longtime shopping center developer whose success led him into ever-larger ventures -- put three major projects into bankruptcy protection. He also narrowly averted foreclosure on The Forum Peachtree Parkway in Norcross, one of his signature retail developments.
A stake in the London property is up for sale, and about a dozen other projects, including those in Sarasota and Orlando, are virtually dead, he said Friday, until he can find new financing. Former business partners and vendors have sued Thomas for nonpayment and filed dozens of liens against him.
Media shy for most of his career, the 55-year-old Thomas spoke with The Atlanta Journal-Constitution about what’s happened to his business.
Though he still owns thousands of acres, his holdings are worth far less than he paid. His Newnan company, Thomas Enterprises, is down to 50 employees -- from 750.
“Some nights I go home and I’d like to crawl under the bed. We wept and cried and cried,” he said about laying off employees.
Thomas is hardly the only Atlanta area developer humbled by the downturn. Prominent homebuilder John Wieland and developers Wayne Mason and Ben Carter have been forced to stall, downsize or abandon projects.
Thomas, however, exceeded all of them in his ambitions and land holdings -- more than 20,000 acres of developable land across the country and 15 large projects in development at one time.
While Americans loaded up on easy mortgage and credit card debt earlier this decade, Thomas and developers like him took on debt of astounding proportions.
Wachovia Bank, his main lender and now a primary creditor in the bankruptcy cases, treated him as a “tier one” customer, Thomas said. Wachovia would not comment for this story.
One jumbo loan Thomas personally guaranteed was for $125 million on The Rim, a 2 million square foot destination shopping center in San Antonio. He owes $63 million on Prospect Park, a speculative retail development that was supposed to attract luxury retailers to Alpharetta. Today it consists of a half-built parking deck.
Both of those projects, along with another in Smyrna, are in Chapter 11 bankruptcy protection.
Before the credit markets collapsed, Thomas was planning five “mini cities” across the nation.
The only one on which significant work continues is the Railyards development in Sacramento, Calif., where Thomas’s company is at the center of a complex public-private venture to turn a former railyard and Superfund site three times the size of Atlantic Station into 12,000 housing units, hotels and offices.
Power center developer
Thomas’ stamp is all over the metro Atlanta and the Southeast. Starting in the 1980s he developed a series of sprawling “power center” shopping areas such as Douglas Pavilion, Venture Point in Duluth, Southlake Pavilion in Morrow, Fayette Pavilion and Newnan Pavilion.
By this decade Thomas’s prominence had landed him on the Georgia Board of Economic Development. He was appointed in 2003 by Gov. Sonny Perdue, to whose campaign he was a major contributor. A year later Thomas sold Perdue a plot of Florida land in a deal that drew scrutiny because of their connection.
In recent years, Thomas had graduated to mega-developments. The Rim, in San Antonio, was envisioned as a destination retail-residential center with a Bass Pro Shops and a future phase bringing several hotels and luxury condos.
Long used to spending his days arranging financing, flying lawyers and brokers to his properties in his private planes and schmoozing tenants, Thomas now deals with bankruptcy lawyers and tries to hold together what remains of his empire.
“To stay awake at night worrying about how to do all of it.. . It’s a lot of responsibility,” he said. “We’re just having to navigate through the treacherous waters right now to get to the smooth waters.”
Thomas said he grew his company by putting up his own money for projects, then arranging the necessary financing once the land was cleared, construction had begun and tenants were signed.
He said “the world started melting down” when banks cut off credit for his mega projects, or when he couldn’t refinance short-term construction loans.
“In the past we’d build it out of pocket and be way down the road, then be able to get a loan because leasing would be up to a point that your lenders would be comfortable. I won’t ever do that again,” he said.
Always his own boss
Over lunch at Il Mulino in downtown Atlanta, the barrel-chested former college fullback barely touched his minestrone soup and salad. Instead, he animatedly explained where he came from, how his business developed and that yes, before the downturn maybe he bit off more than he could chew.
Thomas grew up in south metro Atlanta, where his family owned Southern restaurants in Forest Park and Hapeville. Thomas said he could bake pies, cakes and biscuits from scratch by age 9.
He attended the Georgia Military Academy, which later became Woodward Academy, and played for the University of South Carolina, which he attended on a football scholarship.
Thomas left South Carolina to run the family restaurants after his father had a heart attack. He finished school at Georgia State University, earning a degree in finance and real estate.
He started doing industrial developments around Forest Park in the late 1980s, moving into retail during the 1990s. He always worked for himself, he said.
Thomas owns two ranches where he breeds Angus cattle. One of them is his main residence in Sharpsburg, near Newnan. He owns several other residences and a fleet of aircraft including two Gulfstream V luxury private jets and a helicopter. The aircraft are now for sale.
Thomas has been married for 33 years and has three daughters whose husbands all work for him. He often mentions his devout faith and cites a “passionate faith in Christ” on his company Web site. He said his faith helped him succeed in business and is helping him weather the current storm.
Hotelier Horst Shulze, a former business partner in Prospect Park, recalled that Thomas began their first meeting with a prayer. He thought that took “courage” since Thomas had no way of knowing that Schulze is also a Christian.
Kevin McCarty, a Sacramento city council member who was the only vote against Thomas’s deal in the Railyards project, has raised questions about Thomas’s ability to finish it.
“To me, he has a little bit of a Southern charm,” McCarty said. “I met him for all of 15 minutes, but he wanted to portray himself as a humble guy who can be trusted in delivering such a big thing. I certainly hope for that.”
Bankruptcy ‘a friend’
The credit crunch hit Thomas hard and fast.
The $125 million loan for The Rim came due this year, but Thomas couldn’t refinance fast enough to avoid foreclosure, despite healthy cash flow from existing tenants. Thomas said he filed for Chapter 11 protection to keep control of the land. He made a similar decision on the Smyrna center and the proposed Prospect Park.
“I was hoping I’d get out of here and never, ever file anything,” he said. “But filing Chapter 11 is a friend. That’s what it’s for. It is there to protect you. I’ve come to think of it differently. The reality of it is we intend to still pay everyone.”
Adding to Thomas’s problems: Wachovia got bought by Wells Fargo amid the banking industry’s woes.
“All the folks we dealt with -- the head of credit and the head of lending [at Wachovia] -- were no longer there. All of a sudden there were no loans. You had to try to survive. We kept thinking it would turn eventually, but it kept going and going and going.”
Because Thomas was fronting projects with his own money, he often delayed paying vendors until he got conventional financing. Several vendors interviewed said they understood that’s the way big-league developers work and will work again with Thomas if he revives his business.
But court records indicate some vendors lost patience, filing lawsuits for breach of contract or liens on properties. Many of the suits and liens were dismissed once Thomas settled up.
Schulze, the former business partner in the Alpharetta project, said friends told him to “be careful” when he started working with Thomas. He was eventually paid, he said, but it took a personal visit to Thomas’s Newnan offices and some unfriendly words.
Thomas said he paid Horst more than he was due in order to make good on the business deal.
‘I know how to make money’
Brian Olasov, a managing partner at law firm McKenna Long & Aldridge who specializes in loan workouts, said he understands how a hugely successful developer like Thomas succumbed to easy credit.
“It takes enormous willpower for developers to turn down additional leverage,” because it means they have to commit less of their own money, Olasov said. Credit was so easy to come by that the period from 2005 to 2007 became known as the “cocaine era of lending,” he said.
Richard Martin, associate professor of real estate at the University of Georgia, said Thomas got caught by a “regime shift” in financing that left him overexposed. “Playing by the old rules, it would have worked . . . Developers kind of underestimated how bad ‘bad’ was going to be.”
Said Thomas: “I took it for granted you’d always be able to borrow money. Maybe at 18 to 20 percent like the 1970s, but that I’d always be able to borrow money. I’ll never take it for granted it again.”
In hindsight, Thomas said, he had an inkling of the coming meltdown in 2006. A group of homebuilders involved in the Orlando project pulled out, but at the time Thomas attributed it to the effect of a bad hurricane season.
Thomas has recovered from setbacks before. After 9/11 rocked the economy, he couldn’t close a major loan he’d been counting on and wound up selling eight shopping centers, including four in Georgia, for $680 million to raise cash.
This time, Thomas said he is pursuing foreign investors to bankroll his projects. He hopes to salvage the three projects in bankruptcy, as well as those on hold.
Thomas said he is also changing his strategy and will do his projects in “bite-sized bits” that are more easily financed. But his gut-level faith in real estate development -- and his ability to mine gold from it -- is unshaken.
“I know how to make money and I will continue to work hard and do that,” Thomas said. “Everyone has always said, ‘Stan, you work harder than anyone I’ve ever seen.’ I’ve never asked anyone to work harder than I will.”
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