Once again scooping the RGJ, Downtown Makeover Dude scored an interview with Fernando Leal, The interview covers the Montage, the Fitz, STAR bonds, and downtown in general. Well worth reading, and I’m sure you will have a few comments to relay to Nando.
The bids for the entire Corus real estate portfolio were due yesterday, and will be awarded to a single buyer in a JV with the FDIC in a couple weeks. Then individual properties may be sold off, and Leal says he is a "potential buyer" for the Montage. I sense that Leal’s continued involvement would play well to the masses, but less so to the existing contract holders who have been in limbo and just want their deposits back. A lot of them are just whiners who bet wrong, but others have some legitimate arguments.
I’m putting together some interesting data on who owns what downtown, and what their plans are. In time my friends, in time. I’m actually a bit upbeat. Call me Mr. Sunshine.
MikeZ
re: Dude’s article and photo
Look at all those people in the Montage lobby! When was that photo taken, Downtown Makeover Dude, 2006?
Skrap Guy
With all due respect, I am highly amused at how some people continue to talk about Mr. Leal’s concern and dedication to downtown Reno. Mr. Leal’s concern and dedication has never been to anything other than his bank account. No porblem with that, he is a businessman. But all this sappy goo about his love of Reno? Puh-lease. He would built this project in Dry Gulch, Montana, if he thought he could have made more money there.
Skrap Guy
“prices will need to be adjusted significantly to reach a point where buyers will be comfortable going forward”
In other words, to all have already bought, you are screwed.
This is something the Mr. Leal refused to do as he held on and ultimately saw his project swirl down the drain. Two dozen ‘doom and gloomers’ who posted on this blog starting in 2006 saw this coming, but Mr. Leal was smarter than all the idiots who post here.
Reno Ignoramus
I would not even want to guess at how much bandwidth has been taken up on this blog over the past 3.5 years with respect to the Montage and the other downtown condo projects. The comments must total in the thousands. And what Skrap Guy says is correct. This blog really did predict that the Montage would not make it at the price points originally put forward. There were predictions that the Montage would end up in foreclosure. I believe that this blog was also the first place that the financial problems of Corus bank were discussed, and there were predictions, some well over a year ago, that the project would end up in the hands of the FDIC. I believe that the term “FDIC Towers” first appeared on this blog.
Some on this blog have been called ‘hostile pessimists’ and ‘doom and gloomers’ by those with vested interests in Reno real estate holdings. Fair enough. The discussion has at times been robust. But it has been really quite amazing how totally accurate many of the predictions of the hostile pessimists and the doom and gloomers have been. The Montage being one.
WorriedGuy
You’re dead on right RI. This blog has made a number of good calls and some good advice also. The one thing I am experiencing over and over again is that homes you would want in Reno just can’t be had for a good price considering the future ongoing risks. As Sully mentioned in the comments in a prior post, he searched for a 3000 sqft home in Southwest Reno and it can’t be had for near $300,000, more like $400,000. This is a bit frustrating. I seriously doubt that the bottom of the RE bust is one with reluctant sellers in these higher price ranges.
Martin
Reno Realty Blog Idiots….1
Fernando Leal ………….0
Walter
The Reno Realty Blog Idiots. That has a certain appeal it seems. Maybe Guy/Mike might want to start a softball team?
DowntownMakeoverDude
The pic was taken October 2008 during its grand opening party.
Anyone who reads this blog regularly pretty much knows that you predicted ‘insert-real-estate-news-item-here’.
In fact, every time a Montage news item is posted, most of you go into this same spiel. Every…time. It’s fine to say you predicted it, but it gets old when that’s the majority comments on this thread. I get it. You predicted it. Let’s move on.
How about focusing the conversation on the actual Montage, along with what lies in its future? I predict that NYC Related Company is the winning bidder of Corus’ 105-ish properties. The owner of the Miami Dolphins is CEO/President of Related Co, hence his interest in Corus’ Miami properties.
Do you think he’ll have an interest in selling the Montage to L3 Development or some other entity? Interesting that the FDIC remains a 60% partner regardless, until it’s sold to yet another person. As much as you guys trash the Montage, imagine the Montage multiplied by 60, and you have Corus’ property portfolio. Numerous (understatement) Florida condo towers filled with maybe 30 tenants out of 400+ units per tower. I have posted the list on my site numerous times. Why would someone want to buy so many failed properties? If this market will take 10 years to recover like some of you are saying, why buy so many toxic assets? What’s your prediction on the bid amount compared to the supposed 5 to 7 billion the properties are valued at? See, it’s easy to make the comment thread dynamic and interesting again 🙂
Leal seemed really realistic on what it would take to ‘absorb the remaining units’ as he put it. Do you think a developer could purchase the Montage from its new owner (allegedly Related Co.)for a price that would make it profitable and still be able to sell the individual at extremely low asking prices?
It’s funny how the Montage is never mentioned in any of these Wall Street Journal articles, which often name many of former-Corus’ properties by name.
Also one last question, what happened to the properties that Corus didn’t foreclose on/acquire before they closed, yet still defaulted on their loans to Corus in one form or another? Were those properties lumped into Corus’ assets when the FDIC closed them?
DowntownMakeoverDude
A brief list of some of the former-Corus properties just in Florida….
Jade Ocean Condominiums, in Sunny Isles Beach. The 256-unit tower by an affiliate of Fortune International got a $288.1 million mortgage and has sold 26 units.
– Paramount Bay, in Miami. The 346-unit project by Royal Palm Communities got a $216 million mortgage. It is under construction.
– The Mint at Riverfront, in Miami. The 602-unit project by Key International Development got a $191.8 million mortgage. It is under construction.
– The Trump International Hotel and Tower, in Fort Lauderdale. The 298-unit condo hotel by the Roy Stillman Organization got a $139 million mortgage. Under Construction and unoccupied.
– Quantum on the Bay, in Miami. The 698-unit condo by Terra ADI got a $145 million mortgage and has sold 621 units.
– Infinity at Brickell, in Miami. The 459-unit project by DYL Development Group got a $140.3 million mortgage and has sold 49 units.
– The Ivy, in Miami. The 489-unit condo by Key International Development got a $130.4 million mortgage and has sold 193 units.
– Artech Residences at Aventura. The 235-unit project by Fortune International got a $130 million and has sold 54 units.
– Edge Condominium, in West Palm Beach. The 307-unit project by Wood Partners got a $117.2 million mortgage and has sold 217 units.
– Artecity Governor, in Miami Beach. The 202-unit project by Wave Group Development got a $60.3 million mortgage and has sold 41 units.
– Sole on the Ocean, in Sunny Isles Beach. The 250-unit condo hotel by WaveStone Properties got a $47.3 million mortgage and has sold 91 units.
– Dolcevita Luxury Oceanfront Condominium, in Palm Beach Shores. The 35-unit project by ATM Holding Corp. got a $34.5 million mortgage. It is under construction.
– The Millennium Tower, in Miami. The condo hotel and residential project by Terremark Brickell II got a $112.5 million mortgage that was modified in July with $5 million outstanding. The developer owns six units.
That doesn’t include the Trump project in Vegas nor their luxury spa resort in California or the Montage or Tanamara Condos in south Reno.
RenoRetiree
The reason I first came to this blog is because of my interest in possibly buying a downtown Reno condo, such as the Montage. To repeat what I mentioned in a previous post, I moved here from San Francisco after retiring, and now spend about 8 months a year traveling and 4 months in Reno, where I currently rent an apartment in a large complex. The idea of establishing a homebase in a high-rise downtown condo appeals to me, but only if this doesn’t cause me hassles. Right now I see these downtown condos as having the potential to cause big-time hassles, such as the HOA going bankrupt, so I plan to stick to my well-managed apartment for the foreseeable future. I’m pretty happy where I am, but I feel good about about high-rises and I also continue to like downtown Reno. (Having lived in New Orleans where I was robbed at gunpoint twice, Washington DC where I was attacked by a gang of thugs and listened as someone was blown away by a shotgun outside my apartment building which was on embassy row about 6 blocks from the Whitehouse, San Franciso where I had God only knows how many confrontations with aggressive street people, Paris France which is filthy even compared to San Francisco–I really have to laugh at the widespread notion of commenters on this blog that downtown Reno is frightening.)
I’m only 50 (I retired young) but I believe I’m representative of a sizeable group of people who will be retiring in the future and wanting a carefree urban lifestyle in areas with a mild winter climate. For many of these people, there is a special appeal to high-rise apartments/condos as opposed to garden apartments/condos, so I don’t think all these high-rise condos in Florida, Vegas, Reno, San Diego, etc were a complete mistake. What was a mistake was the lack of attention to keeping costs down and the incompetent management. Nothing can be done about the oversizing and excessively expensive finishes, but that is spilt milk and doesn’t affect the intrinsic value of these units going forward–they’ll just have to be marked down to what would have been the price had the builders been more careful about keeping costs down. Nothing that can’t be corrected via a passage (or two passages, in case of knife catchers) through bankruptcy court, in other words. So I think there will eventually be a happy ending to this Montage tale. But it will probably take a few years to get things back on track.
Raymond
The reason the WSJ never mentions the Montasge in Reno, NV is because in the scheme of things it does not amount to the proverbial wart on Corus bank’s ass.
Carney
Dude to the writers and editors of the WSJ, the only city in Nevada is LV. If it does not concern LV, it does not matter.
Carney
I think Raymond’s comment is well taken. The Montage in Reno is hardly the champion filly in the stable. I would imagine that it will be sold off without much ado.
RR, and alot of other people as well, correctly point out that there are problems with the Montage that will endure after it gets sold to whomever ends up buying it. I agree with RR that it may take years before the problems clear up.
Dude’s vision of a filled up Montage may, someday, come to pass, but not for many, many years.
Carlo
The Montage is more likely to get filled up with renters before it gets filled up with owners.
Not saying that’s a bad thing.
Seems to me that buying residentail real estate in established neighborhoods today has significant uncertainty to it. But at least you know what you are buying into.
Buying into the Montage, that’s if you want to be a mississippi riverboat gambler.
bob c
If the monatage could cap HOA increases
and limit future assessments……it would
sell out quickly and probably at not at extreme
fire sale prices
the montage really appeals to a certain demographic and now that other projects are dead
it is ‘one of a kind’
(somersett, hidden valley and arrow creek are
so run of the mill—-and could be duplicated
easily) but the galena forest can’t
thus i see bright future for the montage once all the legal stuff is resolved and it might be sooner
than people think
Carlo
bob c,
what is the demographic that you see the Montage will appeal to?
thanks.
Carlo
GreenNV
Actually, the Montage is one of the better properties in the Corus portfolio from an investors POV – it is 100%ish complete so no additional construction spending; it is good to go now, and can start generating ROI, and it really doesn’t have any significant competition.
Personally, I think there is quite a lot of demand for product like the Montage, at a certain price point. If mid-tower averaged about $150 PSF with prices higher/lower based on location from there, the project would sell out quickly and erase the HOA concerns. Financing is still an issue, but Related is charted as a bank. And I think there will be a lot of governmental pressure to reduce the 50% sold threshhold for Fannie / Freddie financing.
Reno Ignoramus
So the guy who is trying to peddle a Montage resale on Craigslist at $303 a sq. ft. is out to lunch?
You suggest he needs to drop his price by 50%, Green?
Martin
Green, I suppose there will quite a lot of demand for anything “at a certain price point”.
There appears to be quite a lot of demand for Smithridge condos at about $35 sq. ft.
Hard to argue with the reasoning that if the price goes low enough, these places will sell.
BanteringBear
“LEAL: I talk with many of the owners on a regular basis. The vast majority are very happy with purchase and most bought the property under a long term buy and hold strategy.”
“GreenNV: Actually, the Montage is one of the better properties in the Corus portfolio from an investors POV…”
Therein lies the problem. Too many infestors, not enough end users. We’re not even close to the bottom of this meltdown. There’s been a temporary bump in sales from the tax credit, with first time buyers and infestors gobbling up low-end, lower priced, yet overpriced garbage. Nothing ahead but carnage. I heard that a local temp services agency in Reno had 2 openings for an area of nearly 400k people. Anyone who’s thinking there’ll be stability in the housing market anytime soon has zero grasp on economics. I don’t see a housing bottom for at least 5 years AFTER the depression has ended.
A shout out to RI, Skrap Guy, WorriedGuy, and all the others unswayed by the nauseating swill spewed forth by the shills.
PS- I noticed the median INCLUDING condos is down to $166k and some change. Considering the mix of properties sold- skewed towards the lower end- I still find this too high. In the past, I had posted that $135k wouldn’t surprise me. That might be an optimistic estimate given the economic meltdown which continues, unabated.
bondstevenbond
BanteringBear is back baby!!
Martin
The Bear is back! Welcome. You have been missed.
bob c
what is the property tax rate on vacant lots
in washoe county? does their tax basis carry
from one owner to another or change when a
they are improved?
sorry for changing the subject
hey bantering bear i sold all my stocks in
1997 (3 years too soon) and have had cd’s and
bonds since and i really thot we were doomed
last october when lehman was shut down (12
years of doom and gloom)
i have capitualted and given up on my bearish
stance since the rebound the last 6 months
(though i am not bullish) and for me to go
neutral probably is an gaurantee we are doomed
3 Wombats
Yahoo! The Bear returns, we like your comments – don’t leave us again.
GreenNV
Bob c – The tax rate for vacant land is exactly the same as improved land, since the land and improvements are valued separately. Rates vary a little depending where the lot is, so check out the indivual property on the Assessor’s site and follow the links to Treasurer’s information. Vacant land is capped at 8% annual tax increase before the abatement sets in. The assessed value of the land would not change if the property is sold, but the abated value would not transfer.
RI – I laughed when I saw the Montage resale listed over what he just paid! We will see where the pricing shakes out with whoever ends up with the project, but it is safe to bet that contract holders would have been better off walking away from their 10% deposits and starting fresh at the new pricing, rather than close. Those $450 PSF original prices are going to be $150-175 PSF if the new ownership wants to get out from under the Montage expediently.
BB – Welcome back from hibernation! My point was not that the Montage units are particularly attractive to individual investors, but the project as an entity is to the bidders on the portfolio. I think the FDIC is being criminally lazy in the way the are conducting the auction.
Reno Ignoramus
Hey BB so glad to see you back.
I find it a bit amusing that the day BB returns from hibernation, Mike/Green suggests that Montage units will probably sell for 33% of their original delusional bubble-fueled pricing. I believe it was about three years ago that BB said the same thing. Of course when BB said it people said he was the delusional one. Sometimes it just takes 3 years for reality to set in.
Welcome back Bear.
DownButNotOut
BB
Glad…………to…………see……….. you………..back.
God that hurt!
tim
I love you BB!!!!!
SkrapGuy
BB this blog needs you. I know the blog thing can get kind of tiring after a while, so it’s good to hear from you.
billddrummer
To BB,
Good to hear from you!
RB
Bear, doesn’t being a perpetual pessimist get old? Guys like you will never see the good in anything, and frankly, it’s people like you who I wish would leave the area for good. You add nothing to the discussion except to piss-on others hopes and dreams. You claim you have a firm grasp on the economics of it all, but this is a one of a kind situation and nobody should EVER claim to have all the answers. This is your MO, and it’s tired.