– So far this month, 105 TDs, 234 NOSs, and 234 NODS. I have never seen Notices of Sale equaling (or exceeding, as they did for a while this week) Notices of Default. Did the memo go out and the banks are getting ready for a Summer Inventory Clearance Sale? Just a gut feeling looking at the NODs – the number of upper end properties seems to be declining. Are there work-outs happening?
– "Nob Hill in ArrowCreek" went TD today. It was purchase for $1,750,000 in October 2005 ($1,499,500 new in September 2003), and bought by the bank for $873,000 with no other takers. The amount due at sale on the first was $1,172,607, with a myriad of second, third, etc. loans. The former owner appears to be living in Florida now.
– Remember the R & B property in Verdi that was approved for 660 units and appraised at $40,000,000 before the foreclosure? It came back to the market at $M or so, reduced to $7.M, and then "make an offer"? It just sold for $1,050,000 (though I don’t think the water rights were included). This is the new reality for Reno developers- if they bought property post 2003, it cannot be economically developed with out a foreclosure or major loan restructuring.
– More than half of the Townhouses on Holcomb have now closed escrow, and the model is on the market. Average price has been about $162K on a project that had $500,000 aspirations. Still, good to get people into the neighborhood and the potential of squatters reduced. Do you think the developer was paying the ADT fees for those security systems? There was no electricity to the units!
– The West Street Market’s future is up for debate Monday at 3 PM at City Hall. There are tons of issues, but the bottom line is that the Market is running at at least a $185,000 annual deficit. Rent is about $150K a year, so even if rent were free, the Market would be losing money (though the tenants all say they are doing great). Will the City Council acting as the Redevelopment Agency find it is cheaper to close the Market (and face termination charges and lawsuits from the tenants) or find a new vision for the project, which will actually cost money to achieve? It will be a nail biter, and a good meeting to attend if you care about downtown.
– Competing with you Business Partner for a Short Sale – 510 and 520 Crystal Park is an odd story of partners who live next door to each other. Access to the properties is through a RV storage lot with junk yard dogs, down a half mile dirt road, arriving at 2 relatively new custom homes on the river. The trip is worth it – the location is amazing. 520 caught my eye when it was reduced from $1,700,000 over a million dollars in one fell swoop, then reduced again to $535,000, and i t is active pending loan. 510 originally listed at $1,200,000 and is currently accepting offers at $549,000. The business these folks run puts custom license plates on their vehicles, so I recognize them . It is somewhat disconcerting when you recognize the truck next to you at Scolari’s as someone you are researching for a post, and someone who won’t be living on the river in the near future.
FreeDog! These are just some things that caught my eye this week. What have you seen that makes you go "UUM"? Anyone interested about what is up on Canyon Drive?
smarten
Thanks skeptical –
First of all, I don’t think that what’s going on in Northstar resort real estate is directly related to IV SFRs.
However with that said, I too would be interested in learning more of the details of this default. The Ritz-Carlton consists of an hotel proper plus a number of time shares/fractionalized interests [I think but could be wrong – 27 units] and a number of stand alone residences [I think but could be wrong – 25 units]. Although the hotel operations have been more successful than originally projected [according to Ritz people], I don’t think they’ve been successful in selling time shares and “residences.” Also I could be wrong, but I don’t think the Ritz-Carlton actually owns these properties nor the hotel. I think they’re owned by/a subsidiary of East West Partners [which is in Chapter XI BK] and the Ritz-Carlton hs a contract to operate.
In any event, I would be interested in learning more Mike. And thanks skeptical for bringing this default to our attention.
DonC
Many luxury ski resorts are in deep trouble. Heck, during the Olympics the ski resort where the Alpine events were being held was foreclosed on. That was big news. So the fact that a new luxury ski resort at Tahoe is in trouble is not terribly surprising.
One interesting aspect of hotels and name resorts is the split which smarten mentioned between the owner and the operator. Most luxury hotels are not owned by the operator. In this case Hyatt is the manager but East West Partners is the owner, probably with a very very long term contract. In down markets there can significant conflicts between their interests. The owner has to make the loan payments, and to do this it needs the property occupied. In down markets the best way to do this is to cut rates. The operator, however, doesn’t want to cut rates because it doesn’t have to make the payments — it’s primarily concerned about maintaining the image of its brand — and price cutting isn’t a good way to enhance the image of a luxury brand. As a consequence, the operator will usually refuse to cut rates in order to put heads on pillows.
Sometimes the differences in interest turn very nasty. Should be interesting to see how this dynamic plays out here. If it doesn’t surface that might be a good indication that the problems are more likely minor than major.