OK, the quick Montage box score: 33 units have closed including Unit 514 ($258 / SF) on Monday, leading to a 8.5% occupancy ratio. At least 34 cancellations have been recorded. That leaves about half the units originally under contract still AWOL. The sales office has moved from the rental location on 2nd Street to one of the townhomes, but their web site hasn’t been updated to reflect the move. In fact, the Montage has been pretty sloppy keeping their site current lately.
You guys love to talk about the Montage! The original Montage post racked up 237 comments, more than double the count of any other post in the blog’s history, and earned me the pet name of "Comment Whore" from Diane. But in order to discuss the condo’s everyone cares about and what the future may hold, we need to first take a look at the condo’s NOBODY cares about, the Belvedere. And maybe a quick side trip to the GSR, 280 Island, 100 Arlington, and 1200 Riverside.
I’m not sure how many units the Belvedere is supposed to top out at, or how many were actually completed, but the project sold 80 units. The vast majority of sales were to friends and family of the project, and only 1 of the sold units listed 450 N. Arlington as their mailing address. 20 units are listed on the Assessor’s Foreclosure list already (which is always a few weeks late) and I’ve seen scores of other units on the foreclosure track. My guess is that at least 90% of the closed units are in the process of going back to the bank. Belvedere isn’t even trying to sell units anymore, but they are leasing them.
REO units are starting to make their way back onto the MLS, and the asking prices give a hint of how the banks are valuing downtown Reno condos. Unit 302 originally sold for $250,000, $436 / SF, and is currently listed at $69,900, $130 / SF. Unit 516 originally sold for $275,000, $501 / SF, and is listed at $68,000, $124 / SF. Units 507 and 514 originally sold for between $200,000 and $250,000, and are currently listed for $63,000, $115 / SF.
4 units bought by the master developer went REO Monday. Units 1012, 1002, and 1015 each sold for $256,000, $466 / SF, and 912 for $248,000. The price the bank paid at a Trustee’s Sale is a pretty good indication of where they are going to list the units. PFF (Pomona Financial) took back these units for $46,500 each, $85 / SF. (As an aside, PFF is the also the construction lender on the project. This sale to the master developer took place after liens started piling up on the Belvedere. This sale, as well as another 4-pack sale that is also in default, just don’t pass the smell test.)
Over at the GSR, a Chinese investment group purchased a block of 11 REO units on 23 June 2009, and they are starting to hit the MLS. Unit 1780 was originally $249,423, $616 / SF, was purchase for $56,132, and is currently listed for $39,900, $99 / SF. 1770 was originally $292,658, $574 / SF, was purchased for $56,881, and is listed for $48,000, $94 / SF. Unit 1714/15 was originally $630,000, $500 / SF, was purchased for $141,454, and is listed at $85,000, $67 / SF. There are several other REO and short sale listings at the GSR for under $30,000, about $74 / SF. If you are interested here are the CCRs for the GSR. HOA dues are in the $.80-90 /SF/month range.
The are units going through foreclosure at the Palladio, 100 Arlington, 280 Island and 1200 Riverside. 1200 Riverside unit 1225 is the only REO listing I’m sure about. The 1304 SF unit sold in July 2006 for $267,000, $205 / SF, and is listed for $147,758, $113 / SF.
Which circles us back to the Montage. Corus Bank is the current lender / owner of the project, and they are in dire straights. The dead pool has an FDIC takeover this weekend to give them an extra day to digest the complexity of the situation. In any case, the unsold inventory at the Montage are about to become REOs, whether another institution swallows Corus whole or if the assets are parceled out. To date, the average unit has sold for about $280 / SF or about $280,000 per unit, about a 30% discount from their original contract prices of about $400 / SF . That is fairly in line with the asking prices from the January price sheet after the project went back to Corus, though asking prices may have come down a bit since then.
The GSR, though a different sort of property, shows that prices CAN decline to 15% of the original sale prices in an REO situation. The Belvedere, though not as prestigious as the Montage, shows that highrise condo units CAN decline to 30% (or to less than 20% if the newest 4 REOs list where I think they will) of their original sale prices in an REO situation. The big money question is how will the Montage units be priced when they return to the Market as REOs? $125 / SF or $125,000 per unit on average with $425 per month HOAs is my best guess.
So there, now I’ve really stepped in it! What do you think? At what price would you buy into the Montage lifestyle?
UPDATE: DowntownMakeoverDude responded early this morning, explaining his involvement with the Montage. For some reason, the comment went into "moderation", and I don’t have the power to retrieve it from there. So here is the comment from the Dude:
So now you think I am a freaking shill for the Montage? Jesus, I guess if you like something these days, you are a shill for it.
Fine, let me recap this, again. This isn’t the first time I have been asked this specific question on this blog.
During all of the Montage’s construction, I simply took photos of the progress and had a nice relationship with L3 Development and the staff, not unlike any other open dialog I had with other developers in town doing projects, and not unlike Diane going and taking construction progress pics of the Palladio when she did on this blog. He offered me tours, construction tours, etc, BUT I WAS NOT PAID FOR ANY OF THIS. In fact I had to beg them to let me in the building (developers never get the concept of free PR). I did it out of my own interest, just like Wingfield Towers, Riverwalk Towers, Townhomes at Holcomb Place, and every other development I took photos of/talked with the developers. This was the focus of my blog at the time, duh?
L3 Development appreciated and was impressed with the coverage I gave him simply out of my own interest, so Fernando approached the design firm I work for to redesign his web site, and we did.
That’s it. And I mentioned that on my own blog at least twice (See older news, http://www.downtownmakeover.com/oldernews.asp posting of 9/6/08 and 8/24/08) waaay back when the new site was launched, and even once on this blog. I am proud of my work and wanted folks to check it out. I never worked directly for the Montage and was never on their payroll.
We spent 3 months redesigning their site in mid-2008, and then didn’t do any further work for them. When Corus acquired the Montage, myself and the marketing / PR team were “let go” quite quickly and unexpectedly. Is that enough disclosure for you? Are you happy now that you know my whole life story?
At this point they haven’t even called me to change the address on their web site to reflect their new sales office. I had to find out they completed a new rowhouse model by dropping by The Montage last week on my own accord because I wanted to check out the pool deck furniture, no one even bothered to tell me. I was a little hurt by that, considering how much free coverage I gave them. I have received zero communication from the remaining Montage staff since the ‘grand opening party’.
I am not a SHILL for the Montage, just like I am not a Shill for downtown, and I resent that term.
Anyone who thinks I am a shill or spy or anything of the sort for the Montage, or anyone else for that matter, can take a hike.
Do you really think I would post stuff like this http://www.downtownmakeover.com/08-2-09-Corus-Bank.asp on a regular basis if I were a shill for the Montage?, L3 Development or Corus? Give me a break. In fact I was the first blog/news organization in town that broke the story that Corus put their Montage loan into a non-accural category, was the first to report Corus was acquiring the Montage, and I was the first to report Corus’ continuing problems, long before RGJ, Renorealtyblog, and others, and I even posted about the montagebuyer.wordpress.com website (on 3/20/09, older news page on my site), giving a warning to the Montage they “had better keep their contract holders happy because there is power in numbers.”
I like the project, I liked it before I designed their site, and I liked while I redesigned their site, and I still like it after Corus gave me the boot. I was never, ever paid by the Montage or anyone else to talk about their projects on my site. THAT is a shill, I suggest you look up the definition and stop insulting me.
Sep 6, 8:48 AM
Carole
And don’t forget the 3 or 4 other highrise condo projects that, thank God, never even got started. There was that one on the corner of Liberty and Sierra, and the one over by Lake Street, and the one that was going to go next to Park Towers.
Like Reno really needed 1500 new downtown condos.
Funny how when the liar loans went away so did the “need” for all these condos.
DowntownMakeoverDude
It’s also the fact that a seemingly endless sea of financing for developers disappeared overnight as well. I totally agree with you Carole. I am the first to admit I bought into the hype big time, but my delusional hope was fueled by previously living in downtown LA, NYC, etc, and I wanted to see those types of buildings in Reno. I love tall buildings, what can I say.
Now, looking back, I am sooooo glad it didn’t happen. Imagine downtown Reno if we had the dual-tower 40 story Wingfield Towers next to Park Towers, and the 36 story tall Waterfront tower, and Arterra, and Denovo (the Kings Inn Conversion), and the Nevada Tower conversion. With a glut of unsold condos we’d be more like in the situation Miami-Dade County is in right now. I think at one point, over 6,000 condos were on the proposal books in downtown Reno at one time.
I respect the people on this blog who thought the idea was crazy from the beginning…and I’ve given major props to them on my own site many times.
The Townhomes at Holcomb Place was one of the last projects completed in the downtown area (finishing up construction after the Montage). How are their sales? They are nice units, quite large, with real lofts, originally asked $499,000 for them, I think the price is down to the mid $200’s and they still haven’t sold one of them.
GreenNV
There were a lot of strategic errors that tag-teamed with economic issues to doom the Montage as originally envisioned:
– The train had already left the station by the time they broke ground, but there was no back up plan. By building this as basically a one phase project, the product mix and finish quality could not be altered to meet the market. Floors could not be “locked out” to reduce HOA operating expenses. The size of the project could not be gerrymandered to make reservations meet Fannie FHA standards.
– When L3 saw the market drying up, they didn’t reduce prices to where it was still a viable project. Then made their single worst mistake – they slowed construction by over a year, pushing completion into even worse economic times, angering the contract holders, and opening themselves up to potential legal action.
– Corus did not move as quickly or decisively as they should have to cut prices once they took back the project. L3 brought a lot of equity to the project, and Corus refused to discount much below their break even point.
– I don’t know how it played to out of towners, but their choice of spokes model was disastrous if it way supposed to build the confidence of the locals, who knew all about the Fitz, trench retail, and STAR bonds. The cult of personality was highly overrated, especially when MMC started stone walling the contract holders.
GreenNV
Holcomb – I think they are screaming good deals right now, yet you would be crazy to buy into the project right now. First, though to a more limited extent then the Montage / Belvedere, there is the HOA exposure. 2nd, these are “short sales” at this point, and I’m not sure if the lenders are on board. 3rd, and most important, the construction loan expires in October, and the foreclosure process will probably begin. Why buy now if these units are your cup of tea, knowing better deals are looming a few months out?
Grand Wazoo
Let’s not forget the stellar neighborhood that the Holcomb Townhouses are in. Drive around the SW corner of the block – there are three houses looking like something out of “Road Warrior” that the townhouses are literally built around. Take lovely walk down Mills a block to the west and behold the lovely Lake Mill Lodge – perhaps Reno’s most notorious transient motel.
It is dodgy down there, and a empty townhouse development is not going to change things.
Perry
GreenNV are you saying the construction loan on Holcomb Townhouses is going to expire? When I was in there two weeks ago there was a lady supposedly signing. She was in the loft area of the sales office signing a some papers. This was after their latest price drop down to $250k or something close to that.
If the loan is going to expire you are right about the prices coming down. I think it was on this blog that the townhouses out on Dickerson (the modern ones that sit on the river, not up the river or whatever the Rancho San Rafael style ones are called) were discussed. It was commented that the construction loan was going to expire. Now 1950 Dickerson is listed at $195k. I think that’s pretty much half off original pricing.
The other thing I noticed was the sales office at Virginia Lake Crossing is gone. They turned the office into a garage and left.
Completely un-condo (if that’s a word) related news. Has any else noticed the level of neglect the area’s remaining model homes are in? I went and looked at Lakemont’s Canyon Pines. The water feature was full of scum, there were weeds growing up between the pavers and the lawns have big brown areas in them. It’s like the landscaping service has been downgraded to the “Mow & Run” plan.
Ralph
I would say that downtown Reno is going to need more highrise condos about the same time that Nevada can beat Notre Dame.
Not anytime in the next couple of decades.
DownButNotOut
GreenNV – Excellent summation of where the Montage fell off strategically. With virtually no sales between Sept 2007 and opening in January 2009, there should have been an aggressive approach to repricing and locking in buyers. Apparently easier said then done.
Grand Wazoo
Let me slightly revise my previous snarkly comment – Townhouses on Holcomb have State Street (not Mill) to the north, and is a block west on State that brings you to the fantastic Lake Mill Lodge. So – presumably you buy a joint on Holcomb so you can take in downtown, but you have to walk a block through a warzone to get there. Not going to happen, and certainly not at night.
In case the Dude suggests I’m commenting about downtown when I never go there, I assure you Mrs. Wazoo and I are downtown several times a week, as we live but a mile from Second & Virginia – aka Harrah’s. In the four years we’ve been here the whole downtown has gone backwards IMHO.
The Holcomb Townhouses are on the MLS for $247K with a claimed sq/ft of around 2000. Must be counting the garage!
big baby
“In the four years we’ve been here the whole downtown has gone backwards IMHO.”
and yet it’s been going backwards for 15-20 years now.
you can talk up downtown reno untill the cows comes home, it really doesn’t matter! The place is a DUMP!
oh and as far as downtown being used by locals more than any other time in history? NEWSFLASH without tourists downtown is DEAD.. so that would make sense !
JUNK!
GreenNV
The bank is into each townhouse on Holcomb for about $342,500 – all developer equity is long gone. If the signer wasn’t a shill (I can be hired to sign papers all day long for $25 an hour + fries) and the project is finding traction at $250K, they might extend the construction loan instead of foreclosing. Make the developer do all the dirty work selling the units!
Holcomb did have a strategic plan. They owned additional property on the west side of the block (bought for $442,500 and just picked up at a trustee’s sale for $189,500), and presumably options on the rest of the block for expansion. They started the project on the Holcomb frontage, the “gateway to Grant’s Landing”. Maybe the Dude has a better memory as to the exact timing, but I think Silver Star had already pulled the plug on Grant’s before Holcomb broke ground. Experienced developer vs. rookies. The Grant’s site is probably the most critical development site in Reno right now – I was truly saddened to see that project tank.
I bang my head against the wall every time the “City Council acting as the Redevelopment Agency” meets in their chambers on the single block that has seen the worst decline in the city and debate the blight at Boomtown or streetscapes on SVA or slot machines for a CVS (now) pharmacy. The 000 and 100 blocks of NVA is Kabul after a particularly rough day, and DOIT is being done about it and it doesn’t seem to be seriously on the radar. Is there a single open storefront on the 100 block anymore?
Thanks for the kudos, Down. Think about it though – if the Montage had stuck to their construction schedule, most of the 140 contracts would have closed based on the original terms (financing was still available and the HOA wasn’t an issue and the buyers still didn’t realize how grim things would become). The project still would probably had to go deed in lieu, just a little later. Corus would have still (will) tanked, and the new owners would have slashed prices to market, throwing the early adapters under water and into jingle mail mode. Hubris may just be what saves you from only losing a 10% deposit instead of 70% equity, and that 10% will most probably come back to you through either the current legal actions or through the strategic actions of the new ownership. L3 may have been your best buddie after all!
DownButNotOut
GNV – don’t think I haven’t thought that out already. I’m just hoping the new owners sell me the same or similar unit, use my deposit as a down payment, I’ll pay cash for the balance (75-100K?) and for a little patience, a lot of worry, much griping,and a three year wait I’ll get my place downtown that the wife has always wanted for a fraction of what I’d originally agreed to.
Now it could go the other way, such as the new owner wants too much money, want to confiscate all deposits, play hardball, etc, etc, in which case I still have a good legal case to at least get back my deposit.
L3 would have been a better buddie to communicate this with me rather than have me have to figure it all out myself.
DowntownMakeoverDude
Grand Wazoo, in your tour of that neighborhood, you failed to mention the low-income apartments that are one block west of Holcomb Place Townhomes which draws more police calls than even Lakemill Lodge. I think they’re called City something? I love the police scanner app on the iPhone, its kind of fun to turn it on during downtime or working in the late night hours.
To GreenNV, The Grant’s Landing ‘land’ went up for sale on Loopnet around 5/28/08, a sure sign the project wasn’t moving forward. I have constructions photos of Townhomes breaking ground around 3/21/08, but reported on my site that Grant’s Landing had stalled in a very bad way around January of 08, and even I was predicting then the project as proposed was doomed.
So the developer was aware, in some fashion, but maybe held out hope that both Grant’s Landing and the Ryder Project on Holcomb and Mill were going to move forward eventually because he himself somehow magically secured financing well after the bubble started to burst.
There is a sliver of hope for the Grant’s Landing property though. It’s been rezoned commercial, and per Jessica Sferazza’s request, is being included in one of the two STAR Bond districts being formed downtown.
And finally, regarding your comment on the Virginia Street Facade Improvement program, of which I bet few on here even know about…I’m just finishing up my post where I REAM the city council/redevelopment agency for dropping interest in a $500,000 project that already had the architectural and groundwork done, aligning all of the property owners in unison on a look and feel, could have changed everything downtown and been the ‘the biggest little catalyst project’, focusing instead on a project that involves beautifying Virginia Street from Liberty to the Convention Center. That one pisses me off….big…time. They are meeting about that this Wednesday, and they will hear from me.
DowntownMakeoverDude
And GreenNV, not sure if you saw the actual renderings of the project but here they are http://www.downtownmakeover.com/Facade-Improvement-Proram.asp
What a shame this is being pushed on the back burner.
Grand Wazoo
Dude, let’s get one thing straight before we continue with our conversation:
Did you, or did you not talk up the Montage on your blog while you were on Fernando’s payroll and did not mention this on your blog?
Sorry, I have a huge problem with this kind of thing.
Answer?
DownButNotOut
In ’86 (or so) we allocated public funds for a downtown facade improvement. Granted, This was a town of 10,000 (Healdsburg, Ca- think wine country) but it’s my belief this was THE SINGLE BIGGEST decision the town council made – well really since then. The success facade improvements brought to town were measured immediately with; 1) an immediate facelift for those that participated. Vibrant colors, updates from the’50’s look, and an instant air of we’re going somewhere. 2) vacant buildings were occupied. Yes it’s not a novel idea that when two or three businesses around you look good, entrepreneurs will want the next one available, and invest to bring it up to par.
Give the council/redevelopment agency hell, DMD. It would be HUGE for the downtown if this were to go through.
Big baby
downtown.. heh heh . what a cheerleader
MikeZ
Wazoo, Downtown Dude was a paid shill for Montage? And he didn’t dislcosed that?
bob c
dudes,
what is an appropriate low ball offer level
up there in reno?
lets say bank owned
versus
short sale (higher end property)
how flexible is that market? come on experts!!!!!!!!
DowntownMakeoverDude
So now you think I am a freaking shill for the Montage? Jesus, I guess if you like something these days, you are a shill for it.
Fine, let me recap this, again. This isn’t the first time I have been asked this specific question on this blog.
During all of the Montage’s construction, I simply took photos of the progress and had a nice relationship with L3 Development and the staff, not unlike any other open dialog I had with other developers in town doing projects, and not unlike Diane going and taking construction progress pics of the Palladio when she did on this blog. He offered me tours, construction tours, etc, BUT I WAS NOT PAID FOR ANY OF THIS. In fact I had to beg them to let me in the building (developers never get the concept of free PR). I did it out of my own interest, just like Wingfield Towers, Riverwalk Towers, Townhomes at Holcomb Place, and every other development I took photos of/talked with the developers. This was the focus of my blog at the time, duh?
L3 Development appreciated and was impressed with the coverage I gave him simply out of my own interest, so Fernando approached the design firm I work for to redesign his web site, and we did.
That’s it. And I mentioned that on my own blog at least twice (See older news, http://www.downtownmakeover.com/oldernews.asp posting of 9/6/08 and 8/24/08) waaay back when the new site was launched, and even once on this blog. I am proud of my work and wanted folks to check it out. I never worked directly for the Montage and was never on their payroll.
We spent 3 months redesigning their site in mid-2008, and then didn’t do any further work for them. When Corus acquired the Montage, myself and the marketing / PR team were “let go” quite quickly and unexpectedly. Is that enough disclosure for you? Are you happy now that you know my whole life story?
At this point they haven’t even called me to change the address on their web site to reflect their new sales office. I had to find out they completed a new rowhouse model by dropping by The Montage last week on my own accord because I wanted to check out the pool deck furniture, no one even bothered to tell me. I was a little hurt by that, considering how much free coverage I gave them. I have received zero communication from the remaining Montage staff since the ‘grand opening party’.
I am not a SHILL for the Montage, just like I am not a Shill for downtown, and I resent that term.
Anyone who thinks I am a shill or spy or anything of the sort for the Montage, or anyone else for that matter, can take a hike.
Do you really think I would post stuff like this http://www.downtownmakeover.com/08-2-09-Corus-Bank.asp on a regular basis if I were a shill for the Montage?, L3 Development or Corus? Give me a break. In fact I was the first blog/news organization in town that broke the story that Corus put their Montage loan into a non-accural category, was the first to report Corus was acquiring the Montage, and I was the first to report Corus’ continuing problems, long before RGJ, Renorealtyblog, and others, and I even posted about the montagebuyer.wordpress.com website (on 3/20/09, older news page on my site), giving a warning to the Montage they “had better keep their contract holders happy because there is power in numbers.”
I like the project, I liked it before I designed their site, and I liked while I redesigned their site, and I still like it after Corus gave me the boot. I was never, ever paid by the Montage or anyone else to talk about their projects on my site. THAT is a shill, I suggest you look up the definition and stop insulting me.
Mike McGonagle
DowntownMakeoverDude posted a comment this morning explaining his relationship with the Montage, as he has previously done on his own site. For some reason, his comment went into moderation and I can’t retrieve it. I have added his comment to the body of the article, and I apologize for any confusion, DMD.
durhamdude
I don’t care what DowntownMakeoverDude said.
I assume he is an honorable person. But the minute he took any monies from Leal for anything, he blew his credibility.
Sorry DowntownMakeoverDude, but that is the way the real world works.
DD
Raymond
One thing about Dude. He strikes me as a genuine guy. But naive. He was naive when he bought into the developers shuck and jive. He believed them when they lied to him. Taking any sort of remuneration, call it salary, consulting fees, independent contractor fees, or payola, is still taking money. And it does destroy your credibility as an independent voice. I just think the Dude was so totaly naive about this too, that he never even saw the problem. I’m sure that if you asked him if he believed he did anything inappropriate, he could pass a lie detector test when he said no.
Lurch
Where did the Dude every claim to be an independent and unbiased voice? He writes a blog promoting downtown and his neighborhood. To suggest he has some sort of fiduciary duty to his readership that was somehow breached by consulting on the Montage web site is asinine. Keep up the good work, Mike.
Revi S
I read his blog, and he reported on Mark Lewis’s firing a week before anyone else touched the story and was the first to report the bad situation the redevelopment office is in now. That is not a shill. He reported on the construction of the Montage but I do not recall him ever posting anything like, go buy a condo now! He has lost zero credibility in my opinion. He ooohs and aaahs over the drawings and construction, but never has said live downtown buy a condo, he kind of just reports on his life and the positive things he sees and the negatives equally. I think it is a great perspective, leave the guy alone.
MikeZ
Montage update.
A total of 5 units had lights on at 9pm tonight. None of the lighted units had any sort of window treatments visible, so they’re either vacant props or occupied by exhibitionists.
ps: DowntownDude, sorry for referring to you as a shill. Thank you for clarifying your ties.
Guy Johnson
I have returned from a hiatus from the blog. Looks like I’ve missed quite a thread.
Mike McGonagle informs me that a few comments got caught in our automated spam filter. (sorry about that DowntownMakeoverDude, et al).
I’ve overridden the filter and published the comment in limbo.
Al in IC
CORUS is a goner as of 5P today. MB Financial took some of the deposits…Who get’s the failed RE portfolio??
CommercialLender
Al beat me to it by a minute!
RIP, CORUS
GreenNV
At this point, FDIC has the condo assets. Bids were originally due last Tuesday, but the bid period has been extended two weeks, according to NYT reports today.
$108K lien notice (not a lien, yet) was just filed by the plumbing contractor. This jibes with earlier reports that the FDIC had cut off Corus’ abilty to continue paying out on their construction loans.
Limbo down!
Condo Journal
Downtown Reno is OLD and decayed looking
Higher Crime Rate than sparks
Higher unemployment that sparks