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

[chas]

Originally Posted by kfunck1

Chicago's market certainly isn't imploding like southern California or Florida, but the market value of those contracts has probably taken an enormous hit from the combination of the downturn in housing prices around the country (including Chicago and its burbs), coupled with the uncertainty of the project and the subsequent inherent risk. Regardless, I would think most savvy investors would want to sit back on committing to a relatively expensive housing purchase, considering the prices are going only going to continue to bottom out for another few months at the very least. No one wants to catch the proverbial falling dagger. Not saying it won't get finished, just saying it might take some time.

Even if the market has softened, units are still being sold and consequently the valuation of units contracted at pre-construction prices has risen considerably.

[chi-arch]

^ A one bedroom in the the low 50's floor "sold" in April of this year for $750,000. That same unit during pre-construction was priced around $570,000. I would concur with you that the valuation has risen considerably over that time period and the current market woes really affect the current condo buyer. Unfortunately, Teng really needs to get this project headed back up as the construction price increases over this same period is literally squeezing the profit right out of the project. This project was announced and began selling over FOUR years ago now and it cannot sit idle much longer or the investment put forth to date will be for naught. The development money lost each and every day is mounting.

[TowerGuy37]

well said.....it is so sad..... these units and their finishes are just too nice nice to ever come to fruition! fingers always crossed on this one!!

[the urban politician]

I HATE this thead now.

Hey mods, can you close this stupid thing until we get some real news? There is nothing left to do here

[Nowhereman1280]

Yes please, the banter here is deafening...

[i_am_hydrogen]

I'm going to follow the sound advice of TUP and close this one until some legitimate news emerges. If anyone receives any pertinent info, pm a mod and request that the thread be opened.

[i_am_hydrogen]

Waterview Shangri-La faces another hurdle
By: Alby Gallun Aug. 27, 2008

(Crain's) — The developer of the stalled Waterview Tower and Shangri-La Hotel has hit another snag as it tries to obtain financing to restart the $500-million Wacker Drive project.

Chicago-based Teng & Associates Inc. has been unable to secure trade credit insurance for the 90-story development, and the Export-Import Bank of China won't provide a $400-million construction loan for the project until it does. It is the latest snafu for Teng, which began construction without a loan back in 2006, a move that backfired when the real estate debt markets froze up last year.

The Export-Import Bank emerged as a potential savior in April, but subcontractors have since walked off the job as the loan approval process has dragged on longer than expected.

Now, Teng is shopping for trade credit insurance after getting no commitment from the China Export & Credit Insurance Corp., or Sinosure, which typically insures the Export-Import Bank's loans. The continued turmoil in the U.S. credit markets has given Sinosure "pause," says Zac Henson, CEO of the U.S. subsidiary of Beijing Construction Engineering Group Ltd., which is arranging the financing...

http://www.chicagobusiness.com/cgi-bin/news.pl?id=30756

[BVictor1]

What I found interesting in the article...

"The problem is the clock is running, and they've not said no and they've not said yes," he says. "The loan is approved and it's awaiting funding subject to this last piece of insurance we need to secure."

It's not over yet.

[honte]

^ Yeah, despite the rather sensational title of the article, I'd agree that it's largely positive.

[Steely Dan]

i don't think the article is as negative as the title suggests, however it does sound like more waiting is in store, which might be seen as negative by some of us impatient types who were led to believe by previous press releases that the deal would finally go down shortly after the bejing olympics were completed (ostensibly because all 1.3 billion chinese people were too preoccupied with the olympics to allow them to focus on anything else this summer........... yeah right).

[andydie]

pretty sad to see this one going down Maybe they can use what they got like the Parking Garage in the Dark Knight. Surely would be a big imploding job and would look spectacular in the 3rd Batman

[chi-arch]

2011 now. I would never have figured this one to take 7 years to happen. Oh well, let's just get it headed up for good next time with no more delays.

Thanks for the article

[Sir Isaac Newton]

Originally Posted by andydie

pretty sad to see this one going down Maybe they can use what they got like the Parking Garage in the Dark Knight. Surely would be a big imploding job and would look spectacular in the 3rd Batman

What makes you so certain that this one is "going down". It appears that all they need to do is to acquire trade credit insurance, and they will be good to go. Granted, it may not be overly easy to find an insurer who is willing to take the risk....but no matter how risky of an insured you are, you can almost always find at least one insurer willing to provide you a policy....as long as they get more than enough money in insurance premiums to offset the risk. If that means Teng paying a couple more million dollars on their insurance than they normally would have - I'd think that they would still do that....it seems like a much better option than having the development go under.

As Steely said, there will be more waiting in store....but they have taken care of the hardest part, which is finding a bank to provide them a loan....getting insurance shouldn't be nearly as hard.

[Rilestone75]

Originally Posted by BVictor1

What I found interesting in the article...

"The problem is the clock is running, and they've not said no and they've not said yes," he says. "The loan is approved and it's awaiting funding subject to this last piece of insurance we need to secure."

It's not over yet.

I hope not, but Trade Credit Insurance is not easy to put in place. It requires that all parties involved open their financial books and let the insurers peek inside. Plus with Teng's recent history of financial soundness....? I think it can be done, but I don't think October 1 is feasable for work to start again. I hope I'm wrong on that.

[andydie]

Originally Posted by Rilestone75

I hope not, but Trade Credit Insurance is not easy to put in place. It requires that all parties involved open their financial books and let the insurers peek inside. Plus with Teng's recent history of financial soundness....? I think it can be done, but I don't think October 1 is feasable for work to start again. I hope I'm wrong on that.

exactly my reason why I think this sadly might not work out. I hope tho that I am wrong and we get Waterview as planned. Only time will tell

[jjk1103]

...in the end, Teng is going to be completely forced out of the project (just like Carley with the Fordham Spire) ...the project will be put through a bankruptcy (to flush out all the current trade creditors) ...and someone completely new (with a clean slate) will finish the project......

[F1 Tommy]

Thats the back up plan. I hope Teng can get it together, but if they cant someone is going to get a bargain!
Looking forward to another 1000 footer in Chicago.

[Loopy]

Chicago Real Estate Attorney David Stejakowski says it will take a minimum of 45 days to close the deal with Export-Import.

From his excellent blog: http://dirtattorney.blogspot.com/

Just when you think a deal's going to close, another snag hits. This happens all the time. I know a deal that was supposed to close in June that is just going at turtle speed when it shouldn't be.

Case in point: Waterview Tower. Last month I mentioned that Teng & Associates had apparently plunked down ~$170 million in cash on the future Shangri-La Hotel and condos, but that they were confident they'd get a loan in place soon.

Enter the snag. In this case, the lender's usual carrier for trade credit insurance decides that something (either the market, or perhaps something else) makes this deal too risky to underwrite. So, it's off to Lloyd's and elsewhere to find a company willing to do the deal -- for the right price.

Let's recap. Now you are looking at a huge project at a standstill, probably no policy (or closing) in place until October, the possibility of bringing in a JV partner (which could slow things down again or speed them up if there's enough cash in the game). This is a dirt lawyer's dream -- or nightmare.

So watch for a closing in 45 days, unless there's another snag.

[treras93]

sorry, i'm just not getting this. is this project back on or is the financing simply simply not there? oh man if its off thats a shame because this one was beauty

[aaron38]

What the heck is trade credit insurance? I read through the wikipedia entry and still don't get it.

So Teng is going to borrow money from China. But China wants a garantee that they get their money back if the project crashes. So Teng needs trade credit insurance, which would pay up if needed.

But in that case, why wouldn't the trade credit insurance firm just provide the loan themselves, since they're prepared to take the risk anyway? Why the middleman?