It seems like the Montage and downtown issues are what everyone wants to talk about, so I’ll give them their own thread. Rumors certainly have been swirling lately. At least 2 readers of this blog have units reserved at the Montage – maybe they could give us the "facts" as they know them – and many more readers are plugged into the industry. I have absolutely no inside information, but will share what I have found in the public records.
When a project starts going bad financially, the contractors, subcontractors, suppliers and consultants are usually the first to know – they aren’t getting paid and start filing liens. There are NO significant liens on the property, and the industry scuttlebutt is that everyone are happy campers.
The $143,164,000 construction loan for the project (Recorder Document 3478066 21 December 2006) has a maturity date of 15 December 2008. This is probably the source of the "going back to Corus Bank on the 15th" rumor. The recorded deed of trust includes references to unrecorded documents that allow extensions of the loan up to 15 May 2009. Could the rumor be true? Yes, but I highly doubt it.
A buyer can’t close on a unit until it has received a Certificate of Occupancy (CO) from the City. Although there are some out-standing floors still under permit, the majority of the project had received COs by 20 November 2008. The Montage would not have been able to issue their enforceable 30 Day Closure Notifications to buyers until they received the COs, and closings could not begin until 20 December at the earliest. Closings are phased, since everyone can’t move in at once.
$143,164,000 divided by 370 units = $386,930 per unit. The project pro forma would also have included allowances for carrying costs, construction contingencies, sales and marketing costs, and of course profit. If you assume 30% for these costs, it would put the expected average unit sale price at a scooch over $500,000.
I really like the Montage, and "Mikey hates everything". Everything has been built to first class standards, and I admire Fernando Leal’s vision and commitment to downtown Reno. It will be a big blow to all of us if the project is not successful.
On another but related note, DowntownMakeoverDude has a great article on the Reno City Council prioritizing the 73 projects they would like to be part of the (still theoretical) Main Street Stimulus Package. Make sure to check out the list and leave comments, both there and here and with your councilperson.
inclinejj
Every loan modification, every additional advance under the trust deed, as a 2nd or an advance to the original trust deed I have ever seen was recorded..so I don’t buy this at all..about the rumors
Was it one deed of trust or a trust deed/line of credit for the company building the project used to fund numberous projects?
500k per unit cost break even..steep man really steep..
BanteringBear
I’m curious if these two readers you mention (I don’t recall who they are) purchased their units as “investments” or as primary residences. Many of these projects were built and sold based entirely upon speculation and the belief that “real estate only goes up”. $500k? OUCH!!
bondstevenbond
Last I read on this blog, the Montage is less than 50 percent sold AND many banks are refusing to make loans to individual buyers for condo projects that are less than 50 percent sold. AND, as was recently mentioned on this blog, even IF some borrowers are able to get a loan, MANY buyers will walk away from their 10 to 20 percent down payments in an environment where we all know that ACTUAL CLEARING PRICES of Reno Real Estate are about 30 to 50 percent lower than the peak prices in 2005/2006. Is there anyone on this blog who HONESTLY believes that Montage will fill this building with buyers at currently offered prices? What is the most likely outcome for Montage? BK? Lower Prices? Rentals?
Paul
Urban condo projects require a demographic of young, unmarried professionals working top tier corporate or professional jobs. High rise condo’s and lofts are in high demand in SF, west LA and Manhattan, because that demographic and the high salary jobs that support and draw them are plentiful. I can’t figure out what buyer set the condo developers in downtown Reno expected to attract. Oh yeah, speculators from Stockton.
Given the long term decline of the gambling industry (in Reno) from indian casino’s etc, and the lack of young urban professionals (high salary corporate jobs) in Reno, what is downtown Reno’s economic justification to exist?
inclinejj
Paul
I concur..
Tom
I think Paul is correct; interesting comments on this thread on urban condo living. I think you do need a group of high-earner Yuppies to populate those condo projects.
In downtown Los Angeles, we have many new condo and loft conversion projects being marketed currently. But we have an abundance of young professional DINKS to buy them, then walk to work. Despite this, many are now converting to rentals–they cannot sell them, credit and economic issues blamed.
The junior partners who have bought such units have told me the plus and minus points after having lived there a few months: On the plus side: no commute; handy for going back to the office in the evening; close to Lakers games and the Music Center; being surrounded by other young professionals like themselves; numerous new restaurants and music venues nearby; central location, the hub of the freeways, easy to get anywhere in the region on weekends. On the down side: spooky to walk alone to destinations at night, groups walking together, no problem; homeless people have not been relocated; streets are not pedestrian friendly, hard to connect between home and office, almost easier to drive, even to close destinations; area is totally dead on the weekends; $50 cab ride to the airport from home. More are happy with their purchase decisions than are unhappy, in my unscientific poll of young friends. But they all say it takes some getting used to and adjustment of habits.
But this is downtown L.A., and downtown Reno may be different.
billddrummer
I concur with Paul and Inclinejj that the primary demographic needed to occupy these spaces doesn’t exist in Reno. Isn’t it true that many UNR grads move out of the area after graduation because they consider employment (and personal development) prospects better than here? My oldest daughter is a senior at Spanish Springs, and she’ll attend UNR only as a last resort. Her ambitions extend to NYC, Boston, LA and the Ivy League. She feels that UNR (and by extension, life in Northern NV) is severely constricting compared to the other cities.
And I think she’s right. Now, I truly enjoy it here, and think it’s a wonderful place to live. but I understand how she feels: Even with the higher cost of living in the cities I’ve mentioned, her first job would pay upwards of $55,000/year with a BS degree in Business Administration. Here, that same degree may earn you $35,000, if you can find a job.
All the talk about ‘community redevelopment’ and ‘economic diversification’ and ’emerging opportunities’ for this area appears to me to be just that: Talk.
With the construction and real estate industries in free fall (let’s face facts, OK?), gaming down, visitor counts off by 10% or more, financial services crushed, and the public sector shrinking, the only industry that seems to have a pulse is health care services.
Not a real compelling reason to stick around if you don’t feel led to that industry.
Perhaps there will be an influx of employers that want to establish well-paying jobs for the DINKs you mentioned, and they will revitalize the downtown corridor. Although chances are they won’t be putting their offices there, and if that’s the case, why not live closer to where you work? Even within walking distance of downtown entertainment, you’d still need a car for transportation.
There’s a glut of office space in the South Meadows submarket, and if employers locate there, the condos at Fallen Leaf would finally get absorbed.
This is an interesting discussion. Suppose no one wants to live downtown, even with all the conversions taking place now? What happens to all those vacant units?
CommercialLender
As for the loan, it would be very normal for at least (1) 6-month extension to have been built into the original loan, possibly up to 3. In fact, I would be shocked if it did not have at least 1.
So, $500K for a condo in downtown Reno? No offense to all of us, including MakeOverDude, but this market just does not have that high end cache in today’s market. For a while in 04-06, it made sense simply because condos in the Bay Area were say twice that or some factor. But now there are condos in San Jose, brand spankin’ new, asking that or less and having a difficult time selling. The speculation on Reno was as much as anything a simple play on comparative values relative the rediculous prices in the Bay Area. So it would be only logical for condos in Reno to drastically drop in response to a moderate drop in the Bay Area, which is in fact what we are experiencing.
billddrummer
To CommercialLender,
Unless there have been any subsequent extension documents executed but not yet recorded, the final maturity on the original construction deed of trust is 5/15/09, based on review of the recorded deed Mike referenced. Like you, I would expect to see an addtional extension recorded if in fact the project is behind schedule with presales, deposits, etc.
DowntownMakeoverDude
Hi guys what’s up.
1. It’s pretty hard to offend me, so don’t worry about that. I couldn’t afford a $500,000 condo nor would I want that lifestyle. I like being detached from other homes. I am happy living NEAR downtown (2 minute walk if that) in a cute old neighborhood with a yard for my two dogs.
2 A high percentage of Montage buyers are empty nesters, people who are retiring, and sold their houses (or trying to sell) in Caughlin Ranch and South Meadows, who are over yard work, house maintenance, and the other general headaches of owning a full home and yard. A decent percentage are locals. Another demographic is out of towners. At the Montage appreciation party, I spoke with 5 Montage owners for an extended period at that party, just socializing and stuff, and all were from the Bay Area, and all purchased their units as a 2nd home with the intent of eventually escaping California and moving up here. They like the events we have up here.
3. As for other demographics, why don’t you guys ask the people snapping up Palladio condos, particularly the 5 recent resales, all selling for 30% higher than what the original owners bought it from the developer for. The only units left now are the crappy ones facing 1st Street and the JC Penney building. And ask the people who have contracts with the Montage why they bought them.
4. You guys are right, there isn’t a feasible way Montage can sell their residences at current pricing. 😉
5. Thank you Tom for bringing up downtown L.A., which I actually grew up in for decades, hence my love for urban life. I laugh when people say downtown Reno is kind of scary at night, because ANY downtown, even downtown Portland, is scary at night. Last time I was in downtown San Fran business district at night, I was propositioned by a scary manly looking tranvestite. It’s part of urban life.
6. I’ll say it again; if you don’t think a metro area of over 300,000 people shouldn’t have a downtown center, you are smoking crack. That’s urban planning 101. Even small towns like Gardnerville usually have a Main Street or small downtown center.
7. To say redevelopment has been all talk is to be misinformed. Since 2000, the City of Reno has built a very popular movie theater and riverfront district, a Reno events center that continuously packs in locals for shows, a bowling stadium that brings in tens of millions of out of town dollars in, beautified all the streets downtown, built a whitewater park which brings thousands downtown in the summer to enjoy the river, built a nice parking garage with retail on the bottom, converted the Riverside to artist lofts, built two courthouses, added free downtown bus service, we’ll soon have a $40,000,000 stadium and retail district filling in east downtown, built 2 public plazas, rejuvenated West Street, opened a year round market, and don’t forget all the little projects that add some flair like art on all the traffic boxes, unusual artsy bike racks and more. Oh yeah, ALL talk. What else to you expect them to do in just one decade? Fly to the moon?
8. Hmm what to do downtown? Between the 23 annual events downtown, the Pioneer theater, the movie theater, 20+ bars, Reno Events Center and Lawler Events Center bringing top artists, a slew of nice restaurants, the Bruka theater, some very unique shops, a soon to be baseball stadium, Wolf Pack games, Reno Bighorn D-NBA games, monthly wine walks, Nevada Museum of Art, the Artist’s Co-Op and Sierra Arts Gallery, swimming in the river in the summer, ice skating in the winter, 9 mile long riverfront bike path at my door step…yeah there’s NOTHING to do downtown and no reason to have a downtown. I keep myself busy.
9. Let’s see, only one forclosure within a half mile of my house, only 1 forclosure in 89501 downtown zip code last time I checked, and only 2 forclosures in old Southwest which borders south Downtown. Now, look at Spanish Springs, Sommersett, and the South Meadows area. You tell me, what neighborhood is more stable? Within the McCarren Loop, for sure.
10. Montage buyers will be finding out Friday morning the same news that I learned yesterday when I met with Leal.
billddrummer
To DowntownMakeoverDude:
You didn’t answer my question about how to keep young people in Reno.
DowntownMakeoverDude
That’s a tough one Bill D Drummer, I don’t know enough about economics to really say with any expertise. That’s maybe a question for EDAWN. Nevada has a nice tax structure for business, especially compared to some of our neighboring states, but recent businesses that passed on Northern Nevada for a west coast hub say we lack an educated work force. So how do we get one? Common sense says you have to have the jobs here first before people will relocate here, so I doubt we can get an educated work force from another state. Perhaps a look at our education system is in serious need, since we rank nearly last on every single education-related survey that comes out.
billddrummer
To DowntownMakeoverDude:
You’ve hit a hot button with me, because I’ve got two kids in public school here. My oldest daughter is an overachiever, and is getting the most out of the system only because of the classes she’s chosen, and the energy she puts into them. But the vast majority of the kids she goes to school with simply skate by. And the school district just passes them, whether they’ve learned anything or not.
As far as the University goes, I’m not familiar with its curriculum outside of the accounting, economics, mining and journalism schools (which are nationally known). The others I have no information on. Perhaps someone who’s more privy to the other schools could respond with why so many grads elect to move away, even if they were raised here.
inclinejj
Every city has a downtown or central meeting place except the city of Pacifica!!!
Reno.. Has done alot to clean up downtown Reno in the last 20 years..
But the young kids only go downtown to go to the movies and spend money at the restaurants and bars and clubs..
Why would a graduate of UNR stay in town..When they can go to a bigger city and make twice or triple pay..granted home prices are much higher
Waldo
It appears that the only real industry in downtown Reno is the restaurant/bar scene. Yes, if your idea of a thriving metro center is a bunch of drunk 20 somethings on a friday night, Reno has accomplished that to some extent.
There are very few professional offices left downtown. No doctors, no dentists, a few small lawfirms and accountacy offices, but virtually all of the larger legal and accountancy offices have moved out of downtown. There are the public lawyer offices, such as the DA and the PD, and the Courts are downtown. However, many, if not most of the public lawyers are married with children, and high rise condo living is not what they seek to raise their children.
There are virtually no corporate jobs downtown. No major employer in Reno has any significant presence in downtown Reno.
So I think Paul is right with his comment above. Is it then the marketing strategy to fill up the Montage with empty nesters? Perhaps I am wrong, but I think that a substantial percentage of the over 55 crowd with the financial ability to pay $500 a sq. ft. for a place to live might not find the Montage to be their first choice.
But I suppose we shall see in the coming months.
Waldo
Makeover Dude,
Would you be so kind as to identify for us the five resale units in the Palladio that have sold for 30% over the original contract price?
Thanks in advance.
bondstevenbond
This is a nice thread, thanks Mike for starting it. And thanks Dude for the low-down of downtown activities. I would take a serious look at living in Montage. I have one of those corporate jobs in South Meadows, and still I have an interest in places such as Montage and Palladio because downtown is more interesting for a single person/empty nester than here at Fallen Leaf. On the other hand, I have no intention of buying a 500k condo at Montage when it might be worth 300k two years from now. Snazzy bike racks aren’t worth that risk. Maybe it will better to wait until Dec 2009, Dec 2010, or Dec 2011 to buy. Nothing is worth more than it can produce. I won’t buy a condo at Montage until it is are CLEARLY cashflow positive should I choose to rent it out. I agree with Paul and others about Reno’s demographics. Montage is in a death spiral. I think I’ll wait.
bondstevenbond
Corus Bank? Never heard of it. Sounds like just another crappy bank about to fail.
The bond markets are frozen. No banks are able to borrow money from the bond market except via the FDIC’s Temporary Liquidity Guarantee Program. That is a program that allows some large banks to access the Full Faith and Credit Guarantee of Uncle Sam. Many many regional banks in this country will continue to fail, and the debt of places like Montage will eventually get consolidated on to the balance sheets of major banks such as JP Morgan, Wells Fargo, Bank of America and Citigroup. These major banks are under the umbrella of Federal Guarantees. In others words, we tax payers will eventually be on the hook for the debt of many Montages in this country. It’s not a pretty situation.
As an institutional investor in the bond market I hear things that scare me. Goldman Sachs is now calling for 8 to 10% unemployment. And last week, Morgan Stanley’s Head Economist for Fixed Income mentioned the possibility of 8 to 11% unemployment coming soon.
Save your cash. They called WWI the “Great War” prior to WWII. Welcome to GD II, if you get my drift.
Reno Ignoramus
I agree this is good thread, and I thank all who have contributed to it. This blog can be such a fine place for intelligent discourse when it doesn’t degenerate into personal attacks.
I don’t think the concept of people living in downtown Reno high rise condos (what we have here in Reno are really mid-rise) is a flawed concept. I think the concept of people living in downtown condos that cost $500 a sq. ft. is a flawed concept.
Like a lot of other recent topics on this blog, we have had this discussion before. Two years ago or so I asked the question where are all the buyers for these condos at these prices going to come from? Then, we got a lot of the Rich Californians theory. At least we don’t hear that much anymore. So now we are the point when we get to find out where the buyers are coming from. Many months ago, there was a guy here who went by the name of DataGuy who did a great job of researching and identifying the locations of the buyers at the Belvedere and the GSR. If DataGuy is still out there, maybe he can chime in with some info from time to time on the Montage buyers as the info becomes available.
And to Makeover Dude, thanks as always for being the Voice of the Downtown Hopes and Dreams. I, also, would like to know what resale units at the Palladio have sold at a 30% increase. Thanks.
GreenNV
I have to agree with the comments and thank you all for making this and adult post. What could have been “urine soaked alleys” turned into a nice intellectual discussion.
For you doubters, I have to back-up DMD on Palladio resales. I show 6. Resales occured April – August 2008. Format will be unit #, purchase price, resale price, purchase agreement date:
708 $320,000 $350,000 6/07
901 $502,050 $750,000 9/04
1001 $530,050 $767,500 8/04
1111 $695,000 $860,000 NA
1208 $337,000 $359,000 NA
1211 $544,740 $780,000 10/04
Those are the facts. There apparently ARE people who will pay $500,000 for a condo in downtown Reno right now. Are there enough to fill the Montage?
BanteringBear
Looking at GreenNV’s numbers, I’m calling fraud. How does a condo unit appraise for $767,500 in August of this bust year when it originally sold for $530,050? Someone needs to look into these sales. Something really, really reeks.
Ralph
I also find those numbers very curious. When every house in Reno is down at least 20% from the 2005 high, and many down 30% or even 40%, how can these condos be heading in the opposite direction by 30% ? I’d like to know the details of these transactions. Such as: did the same appraiser do all these? What did he/she use as comps? Who was the lender?
Virtually every house, and every condo not in the Palladio, in Reno today is not worth was it was in 2004. And yet, these condos are up 30?
I’m not willing to say fraud has occured, but it is quite curious.
inclinejj
Looking at GreenNV’s numbers, I’m calling fraud. How does a condo unit appraise for $767,500 in August of this bust year when it originally sold for $530,050? Someone needs to look into these sales. Something really, really reeks.
Drive by appraisal…normally at about 35 or 40 mph..or a desk top appraisal..
If you had awesome scores back then they let you waive the appraisal..
Not no more..
The rich people from the Bay Area and SoCal where going to sell the million dollar houses and buy in Reno-Sparks area for 500k..and bank the rest..
That was the plan..
BanteringBear
GreenNV posted:
“Those are the facts. There apparently ARE people who will pay $500,000 for a condo in downtown Reno right now.”
Nope, GreenNV, I’m not in agreement. I am convinced that he bulk of these resales are fraudulent. So sure, that I’m going to bring them to the attention of someone who cares, and CAN get to the bottom of it.
It’s completely obvious that it’s nothing more than a thinly veiled attempt to boost prices, in order to stimulate demand for the unsold condos by making them look cheap as compared to these resales. Mortgage fraud peaked during the end of this bubble, and the majority of these sales just don’t pass the sniff test.
CommercialLender
For grins, anyone want to take a crack at what the Montgage rents, as if a rental, would be? Post your rent estimates and the unit mix, and I’ll run some quick numbers on what, roughly, the debt would look like in my world.
billddrummer
To CommercialLender:
That’s the $64,000 question, isn’t it?
Before reading, realize that these are strictly back-of-the-napkin computations.
A ‘normal’ condo (not Montage) probably would rent for around $1.20/s.f., which would suggest a rent of about $1,000 for the 1 BR/1ba tower units.
If you take the position that Montage amenities and cachet are worth an additional $1.50/s.f. (which I don’t, but that’s another story), then the tower rents would be $2,400/month, roughly.
Larger units would command higher rents, say up to $3.50/s.f., and perhaps $5/s.f. for the penthouse spaces.
I’d appreciate any comments.
stjoe55
NEW MONTAGE DEVELOPMENT
Email dated 12/13 from Fernado Leal
It is with a heavy heart that I inform you that L3 Development will no longer be the owners of The MONTAGE. The loan with our lender, Corus Bank, is up for renewal in December and my partner and I have made the very difficult decision to return the project to the bank once completed. This was a business decision strictly driven by the uncertain economic conditions that currently exist on a global scale.
WaitingTooLong
Yes, The notice has finally arrived and brings more questions than answers. I’m curious what other people think about the durability of the contracts now that L3 will no longer own the building. The contract was with 225 North Sierra Street LLC, signed by Fernando.
Corina
So this is the good news that Makeover Dude would not share with us until Leal himself spoke? Yes, that’s terrific news Dude.
Really makes me want to rethink my decision not to buy an overpriced “urban village” apartment in the middle of boarded up decaying old closed down liquor stores and casinos. I’m sure Corus bank will be a fine owner of the biggest mistake ever built in downtown Reno.
DowntownMakeoverDude
I posted the full letter over at my site. It sounds like the buyers will be getting sginificant discounts at least. You forgot to include that part StJoe55. 🙂
WaitingTooLong
I love Downtown Reno too and want very much to see it thrive. But this does not seem like an time for smiley faces.
Waldo
Well at least Corus bank ought to have some experience with it. Corus is the lender on belly-up failed high rise condo projects all across the country. Corus may end up owing half of Miami. Until the FDIC takes it over. Then we all can say we own a piece of the Montage.
DowntownMakeoverDude
Corina, the good news is that the project isn’t becoming apartments, isn’t becoming rentals, is not going into foreclosure, and the buyers get discounted pricing before close.
What is the big deal about Corus taking the project back with a lien-free deed-in-lieu of…the Palladio was put into conservatorship and it continued to sell units and NOBODY got a discount. And Fernando is staying on to continue to manage the project. So am I mising something?
ThomasV
Yep, Corus is offering one of the highest CD rates in the country. They need cash badly. Not a good omen.
I follow the banking industry pretty closely. Having to take back the Montage is not good news for Corus.
BanteringBear
“This was a business decision strictly driven by the uncertain economic conditions that currently exist on a global scale.”
Instead of blaming this on the economy, let’s call a spade a spade. This was a STUPID PROJECT from the get go. It was destined to fail, just as would an overpriced bikini shop in Barrow, Alaska. Some of us realized this, way back before reconstruction began, but Mr. Leal, in all of his greedy foolishness, thought that $500k+ condo’s in downtown Reno ‘penciled out’. Big shocker here, NOT.
BanteringBear
DowntownMakeoverDude posted:
“Corina, the good news is that the project isn’t becoming apartments, isn’t becoming rentals, is not going into foreclosure, and the buyers get discounted pricing before close.”
Dude, put down the Kool-Aid and take off the rose-colored glasses for a moment, will ya? I mean for god’s sake, this is NOT good news. Furthermore, there is absolutely no evidence that this will sell out and avoid rental status, and if it does (surely at steep discounts), it was still a miserable failure, as the bank takes a beating. You are very impressionable to say the least.
Corina
If it’s such great news, Dude, why does Leal have a “heavy heart” in announcing that his project has failed? You don’t give successful projects back to the bank Dude.
The Palladio went into conservatorship because the construction control was poor on the project, not because the project failed as a business venture. A deed in leiu, Dude, is what you give simply to avoid foreclosure. Both are indicative of a failed venture.
As far as the project not becoming rentals, well, Dude, you may be premature in making that announcement. We’ll see.
Recall the Village at Idlewild, another “urban village” project of overpriced condos that had to convert half to rentals to stay alive. We’ll see.
Reno Ignoramus
Gee, like I said earlier, I don’t think the concept of people living in downtown Reno condos is flawed. I do think the concept of people living in downtown condos that cost $500 a sq. ft. is flawed.
So if Corus is willing to take a complete bath on this project, and offer to sell and then finance these things at what ordinary people can prudently afford, then maybe there is light at the end of this tunnel. But Corus is going to have to take an immense bath for that to happen. I agree, we’ll see.
And really, Makeover Dude, your attempt to spin this as good news strains credulity. A more credible response is to acknowledge that the failure of the Montage is a blow to downtown redevelopment.
DowntownMakeoverDude
Did I ever say the project was a success? No. But why don’t we look at the alternatives of what could have happened:
1. Project gone right into foreclosure instead of dee-in-lieu.
2. Buyers stuck with their current contracts with NO discounts.
3. Project completely shut down.
4. This could have happened midway through construction, threatening the entire project, like Belvedere.
So yes, it’s bad Corus is taking the project back. I get that. But the outcome could have been much worse, like some of the half-finished subdivision wastelands of Sommersett and Wingfield Springs. I also realize no matter what Fernando Leal says, the project is in Corus’ hands now. If they do what they say they are going to do in that letter, then I don’t see much of an issue. I wish I had gotten the chance to interview him instead of relying on a buyer’s letter. Oh well.
DowntownMakeoverDude
I’m not trying to spin anything I was just trying to find some positive news in some really negative news that’s all. But I guess that’s pretty futile at this point, so I give up. Going by what Fernando wrote it didn’t seem so bad.
smarten
Now how is a deed in lieu of foreclosure any better than a straight foreclosure?
And now that the seller of these units can no longer deliver on ANYTHING, how is it that any purchaser continues to be obligated to follow through? Okay, the discount might be large enough to convince purchasers to hang in there. But what about those who’ve been clammering for how long to get out of their contracts and recoup their deposits [which I understand are still in escrow]?
I think it’s good news for those who want out without losing their deposits [and I know there are at least two of these people on this blog]. An early Christmas present.
Radcliff
So Mr. Leal has agreed to continue on to help sell his overpriced condos on behalf of the building’s new owner because of his heartfelt concern for downtown Reno and his genuine interest in the fine citizens of Reno.
Or could it be because Mr. Leal and his partner have signed personal guarantees of their company’s debt to the bank?
MontageBuyer
Take it easy on downtown dude he is probably in initial denial, it’s a big blow to something he is obviously passionate about.
I am a Montage buyer, and I don’t see how this situation allows anyone to get out of that rock solid contract. If you think they magically float away because Corus takes it back then you better get a good lawyer.
I am looking forward to seeing what kind of discount I get. Just a guess, or prediction, but I am hoping to get $80K shaved off my price. Hear that Mr. Leal? Or Corus Bank? That would make me stay.
Raymond
Why would anybody possibly go forward and buy in the Montage now? By the time Corus Bank takes its hits from all the failed condo projects it has financed across the country, many of which will fail in 2009, who knows what it will do. How can anybody be assured that a year from today the Montage won’t be the biggest apartment complex in Reno? Or essentially the biggest dormitory for UNR students?
And please don’t tell me that just won’t ever happen. We are in very uncertain economic times now. Anything can happen.
Radcliff
MontageBuyer isn’t there an inconsistency in your comment? You say the change in ownership means nothing to buyers who are stuck with their purchase contracts, but then imply that if you don’t get the deal you want you will walk.
Huh?
MontageBuyer
Smarten I think you are confusing a deed-in-lieu with a forclosure. Had this project been forclosed upon there we be almost no question we could get our deposits back. A deed-in-lieu doesn’t change the deed and doesn’t change our contracts.
In additional, the building is complete and delivered as promised, I just flew up to Reno and took a tour last week. Not sure there is anything left for the developer to ‘deliver’ on. He did in fact deliver what he promised to us.
It’s up to Corus Bank now. How much do we know about this bank? Anyone know? I do feel comfortable Leal is staying on since he has been my main contact there. The thought of having to instead deal with a faceless bank is unpleasant.
MontageBuyer
Yes I will walk, as in forfeit my 10% deposit and call it a bad decision for a 2nd home. Anyone is able to walk on their 10% deposits and wash their hands any time, what Smarten was referring to and what I was commenting on is that Corus taking the project back without a forclosure status does not translate to a refund in our deposits, like Smarten suggested.
MontageBuyer
What is the health of Corus? That is the real question here.
GreenNV
Montage contract holders, care to share some specifics? Unit type, size, contract price? My understanding that the deposit was 10% of the purchase price. Assuming financing will be available (through Corus?), how large a price reduction will it take to make you close on the unit? Since Corus hasn’t confirmed their pricing plans yet and we don’t know what Leal’s analysis of “market” for them was, this could be a chance to put a little pressure on Corus to get real.
RE: Corus Bank http://www.bankrate.com/brm/safesound/commmm.asp?fedid=259031
Raymond
MontageBuyer I suggest you do some homework for yourself, but notice how many people on this blog have already said how well known Corus Bank is as a lender on high rise condo projects all across the country. High rise condo projects have been its main customers for the last many years. So you reach your own conclusions about the financial condition of bank knee deep in high rise condos projects. But consider this:
Corus profit is down 83% ytd; half of all its high rise condo projects are in defualt; and, as mentioned above, Corus is currently offering a 12 month CD at 5.7%. If that CD rate, in comparison to rates offered by stable banks, does not scare the hell out of you, I guess nothing will.