CHICAGO | Waterview Tower | 1,047' Official / 1,035' Roof | 89 FLOORS |NEVER BUILT

[chi-arch]

Originally Posted by Jaroslaw

apparently MO

Shangri-La

[honte]

^ Not a bad theory. If true, they could also lose big-time if the cost of money continues to go up.

[LoyolaBeachView]

Originally Posted by dvidler

One potential lender is California-based Fremont Investment & Loan, which has had discussions with Teng.

“We are interested in the deal provided we can find suitable co-lenders,” says Scott Manlin, vice-president and regional manager at Fremont. “We believe in the deal. We like the deal.”

March 22, 2007
Fremont Selling $4 Billion of Its Subprime Loans
By REUTERS
Fremont General, which is seeking a buyer for its subprime mortgage unit, said yesterday that it would sell $4 billion of subprime mortgages, reducing its exposure to the risky loans.

The sale will result in a $140 million pretax loss, less than investors expected, and its disclosure helped push up shares of the company, based in Santa Monica, Calif., by 16 percent, to $10.19. Broad stock indexes advanced strongly yesterday.

The share price of another California lender to people with poor credit histories, Accredited Home Lenders Holding, of San Diego, closed up 11 percent, to $11.96, after a second hedge fund in two days reported a sizable equity stake.

Fremont said it expected to complete its loan sales in the next several weeks and received $950 million in cash from a first installment. It did not identify the buyers. The projected loss reflected that the loans were priced around 97 cents on the dollar.

A Fox-Pitt, Kelton analyst, Matt Howlett, commented that “it’s a huge positive and a big step toward exiting the subprime business.”

As of Sept. 30, Fremont had $5.54 billion of loans for sale on its balance sheet, and $5.96 billion held for investment. All its assets totaled $12.8 billion.

Subprime lenders are struggling amid rising delinquencies and defaults. Many financial companies are selling their subprime units, and more than two dozen have gotten out of the subprime business in the last year. Share prices have slid, attracting some bargain hunters.

The Citadel Investment Group, a roughly $12 billion Chicago hedge fund that was created by Kenneth C. Griffin, said yesterday that it took a 4.5 percent stake in Accredited. On Tuesday, Accredited said it had received a $200 million loan from a San Francisco-based hedge fund, Farallon Capital Management, which has a 6.9 percent stake.

Last Friday, Accredited said it would take a $150 million pretax charge for selling $2.7 billion of its loans at a discount. The charge suggested that the loans were priced at roughly 94 cents on the dollar.

Fremont has stopped making residential loans and has hired Credit Suisse to help sell its subprime unit, Fremont Investment and Loan. It has notified some of the unit’s 2,400 employees that they would lose their jobs on May 18.

Fremont has also said it would comply with an order by the Federal Deposit Insurance Corporation barring it from risky lending.

[BVictor1]

Shangri-La Hotel developer gets $20-million loan


By Alby Gallun
March 21, 2007

A year after breaking ground, the developer of the Waterview Tower &
Shangri-La Hotel has finally secured a $20-million loan, a step in the right
direction but not enough to finance the entire 90-story condominium-hotel
project on West Wacker Drive.

Rendering of Waterview Tower & Shangri-La Hotel (center building)

Chicago-based Teng & Associates Inc. surprised many observers in January
2006, when it broke ground on the high-rise at 111 W. Wacker Drive without
first securing a construction loan. Months passed without news of a loan,
fueling doubts about the project even as construction continued, albeit
slowly.

The recent $20-million loan from Chicago-based LaSalle Bank N.A. won't quell
those doubts, considering the project is expected to cost more than $400
million. Construction loans for similar projects usually account for 70% to
80% of costs.

Loan documents filed last month with the Cook County Recorder say little
about the terms of the loan, which probably is a form of stop-gap financing
until Teng can secure a larger construction loan. A Teng affiliate did not
borrow money to finance its $10-million purchase of the property in 2000.

Teng President and CEO Ivan J. Dvorak did not return phone calls for
comment, and a LaSalle spokesman declined to comment.

One potential lender is California-based Fremont Investment & Loan, which
has had discussions with Teng.

"We are interested in the deal provided we can find suitable co-lenders,"
says Scott Manlin, vice-president and regional manager at Fremont. "We
believe in the deal. We like the deal."

Yet sales of the project's hotel units have been slow. Teng is selling rooms
and suites in the Shangri-La to individual investors, much like it is with
its residential condos. Condo-hotel owners are able to occupy the hotel
units when they want and have the units rented out when they're away.

The concept, however, has received a lukewarm reception in Chicago. Teng
began marketing its 200 hotel units in October 2005, but buyers had signed
contracts for just 70, or 35%, in January, the same number as in October
2006, according to Appraisal Research Counselors, a Chicago-based real
estate consulting firm.

Teng and other condo-hotel developers have also attracted the attention of
state regulators, who have been investigating allegations that the
developers violated state securities laws by touting the investment
potential of their rooms. A state securities official was not immediately
available for comment.

Related story: Condo-hotels draw scrutiny

Teng has had more success selling residential condos in the project. Of 233
residential units, 150, or 64%, were under contract in January, according to
Appraisal Research.

Meanwhile, construction on Waterview Tower has moved slowly. More than 13
months after Teng's groundbreaking ceremony, the building's concrete core is
barely above street level. A construction crane on the site sat still
Tuesday afternoon, and a worker pushing a broom was the only activity
visible to a sidewalk observer.

[WonderlandPark]

Thought this one was a lock. I would be so bummed if this one fell through.

[BVictor1]

Originally Posted by WonderlandPark

Thought this one was a lock. I would be so bummed if this one fell through.

I was told that the article has some in-accuracies.

[WonderlandPark]

Well, that last sentence is the most omnious, the one about no activity on a weekday.

WTF, like Saca's Towers on Capitol Mall (Sacramento) the developer pressed ahead and went full bore, got a foundation/piles laid and then ran into trouble.

Fremont is in deep shit, btw, don't know the full story on how much Teng is relying on them.

[peacefu603]

Thx

[Nowhereman1280]

Originally Posted by WonderlandPark

Well, that last sentence is the most omnious, the one about no activity on a weekday.

WTF, like Saca's Towers on Capitol Mall (Sacramento) the developer pressed ahead and went full bore, got a foundation/piles laid and then ran into trouble.

Fremont is in deep shit, btw, don't know the full story on how much Teng is relying on them.

Yes, but I don't think the site was inactive, I think the reporter was too stupid to look in the hole. They have been excavating non-stop for a long time now, they are now at the bottom of a 4 story pit...

[kalmia]

maybe this is a dumb question or has been anwswered before, but can't the core continue up without the basement floor being poured?

Also, if Teng did into a somewhat Carley-like situation where they could not come up with enough money to go forward, another developer would likely buy the property for a good price (for the new developer) and continue the project, but hopefully without harming the design.

[chi-arch]

Originally Posted by kalmia

maybe this is a dumb question or has been anwswered before, but can't the core continue up without the basement floor being poured?

Also, if Teng did into a somewhat Carley-like situation where they could not come up with enough money to go forward, another developer would likely buy the property for a good price (for the new developer) and continue the project, but hopefully without harming the design.

Yes, someone could step in, but that would be a huge black eye for Teng and is highly unlikely. The design is set. If a new developer messed with the design, there would be a mass exodus from current purchasers and I would be first in line out the door.

[Steely Dan]

Originally Posted by WonderlandPark

Well, that last sentence is the most omnious, the one about no activity on a weekday.

i don't think that was reported accurately.

and if it makes you feel any better, when i walked past the site this morning, the tower crane was working, moving around what looked like big bundles of rebar....... so we got that going for us........ which is nice.

[SamInTheLoop]

Originally Posted by Rocket1

It seems like the hotel-condo aspect is potentially the major stumbling point in this whole deal.

Is there any indication that a buildings like the Waterview might financially sound with a combination of a traditional hotel and residential condos, rather than a hotel-condo and residential condo combination?

It's a no-brainer to convert the hotel-condo section to just traditional hotel rooms. Teng (as well as Palladian and Related Midwest) might end up very sorry they did not choose to do this. Perhaps part of Teng's hesitation is that
it would add another layer of complexity to the construction loan financing process to go the traditional hotel route. To alleviate that, they could actually pre-sell the hotel portion to an institutional hotel investor ala Aqua.

At the end of the day, I think Teng will end up with a complete loan and complete the project as planned, but it is very disheartening to be over a year into construction and they do not have full construction financing lined up. I think their inexperience as a developer on large, complex projects is at work here with the lending community, just at a time when experience is becoming much more important...

[LoyolaBeachView]

Originally Posted by Steely Dan

i don't think that was reported accurately.

and if it makes you feel any better, when i walked past the site this morning, the tower crane was working, moving around what looked like big bundles of rebar....... so we got that going for us........ which is nice.

Sigh of relief.

Do we even know where that article came from? a reputable source?

[honte]

^ Crain's.

I'm not worried yet, but I'll feel a lot better once the thing starts going vertical. After the Grand Pier debacle, I don't let my guard down until I see a frame rising. A ground-breaking ceremony or even foundation work doesn't cut it these days.

[BVictor1]

Originally Posted by LoyolaBeachView

Sigh of relief.

Do we even know where that article came from? a reputable source?

It came from Crains Chicago Business

I wonder if the reporter went to the site during lunch. I was there in the sales center last week around 12:30, and noone was there, and I look out the window 15-minutes later, and there was activity.

[Jaroslaw]

-I had a gut feeling way back when that going four stories down was not the best idea... it just doesn't make any sense economically when you can put all the parking you want above ground. They do need to go one floor down to get the Lower Wacker delivery logistics, but if they went with just that, they'd be a few stories above ground already, and that's a huge billboard right there, right now...

[chicubs111]

This article is not directly related to waterview but it mentions the lenders freemont supporting another chicago project...

Chicago Gold Coast Condo Project Bags $96M in Lending
March 22, 2007
By Dees Stribling, Midwest Correspondent

Ten East Delaware Place, a ground-up condo project in Chicago’s Gold Coast neighborhood just north of downtown, has received approval for a $96.2 million construction loan. The funding will be provided by Fremont Investment & Loan, a subsidiary of California-based Fremont General Corp., to an affiliate of the developer, Chicago-based Prime Group.
The project (pictured), which will include 121 units, is one of the few new residential developments under way in the neighborhood. It’s going ahead despite a sluggish local condo market. According to the Illinois Association of Realtors, condo sales in metro Chicago totaled 10,635 units in the fourth quarter of 2006, down 13.4 percent from the fourth quarter 2005 total of 12,287 units.


“Condo developers have to be selective in Chicago, but it’s still possible to excite interest among buyers if you have an attractive product at a good location,” Scott Manlin, vice president and regional manager of Fremont’s Chicago office, told CPN this morning. “Certainly anything new in the Gold Coast is going to attract attention.”

According to Manlin, about 40 percent of the development’s units are reserved or under contract. “Ten East Delaware is also a popular property because it’s a relative bargain for the neighborhood,” he said. “The average price of the residences is well under $1 million, which is very competitive for the Gold Coast. For about $600,000, a buyer can get a nice one-bedroom, maybe $650,000 with parking.”

The 36-story concrete and glass structure, designed by Chicago architect Lucien Lagrange, will be faced with sand-colored limestone and will feature curved balconies. Site clearance for the project has already started, according to Manlin.

http://www.cpnonline.com/cpn/propert..._id=1003561652

[twomutts]

I work right across the street from the site, and can tell you that right now, while place isn't exactly crawling with construction workers, there IS activity going on. Looks like they're doing some finer level excavation.

[Mojava]

There's reasons why developers are building hotel condos vs traditional hotels. For one, they are much easier to finance. You cant just change your product to tradition hotel and expect to get financing. One other possible reason for not getting a construction loan as of yet is cost. If Teng doent have the cost of this building under control, especially with increased construction costs, they will not get a loan. Lenders care as much about costs as they do about pre-sales. 5 star hotels are very expensinve to build.