Koll Group Says Land Sales Decline a Big Factor in Loss

NEWPORT BEACH —  Koll Real Estate Group Inc. on Friday cited declining land sales and reorganization costs in its widened losses in the second quarter.

The Newport Beach developer, which has been thwarted for years in its attempt to build homes near the Bolsa Chica wetlands, posted a net loss of $9.5 million, or 19 cents a share, compared with a loss of $6.7 million, or 14 cents a share, for the same quarter last year.

Sales declined 55% to $7.2 million from $16 million.

The larger second-quarter loss resulted primarily from dwindling land sales in the company’s planned communities in Michigan and San Diego County, Koll Real Estate said. Costs related to the company’s pending bankruptcy reorganization accounted for another $1.7 million of its loss.

But a heavy debt load has been the company’s biggest stumbling block. Delays in developing its core asset, the Bolsa Chica project, have added huge interest charges to the company’s books.

In the first half of this year, the company paid $12.4 million in interest on its $210 million in bond debt, up from $11 million during the same period last year.

These financial woes led Koll Real Estate to file a Chapter 11 bankruptcy reorganization in July. The stock was delisted from the Nasdaq market. Company shares are trading in the less-active, over-the-counter markets until its reorganization is complete.

Shareholders already have approved a recovery plan in which the company would erase its debt by giving a 90% stake in the company to bondholders. The plan is pending before the bankruptcy court.