Jameson House | 116m | 37fl | Completed

[Spring2008]

[QUOTE=muzhav84;3914145]i posted in another thread, but the "Bow" tower in Calgary is on hold untilk financing comes through...

First of all where did you come up with this idea that the Bow is on hold, it's still under-construction. Also, why would that make some of you happy? I really thought living in a beautiful city such as Vancouver people would be highly unlikely to dip down to the level of being haters.

[mr.x]

Originally Posted by Cypherus

For some reason I feel the same way too.

They've only stolen our title in being the Western Canada financial headquarters, all those office jobs stolen from us.......my ultimate dream for Calgary's Bow, how it'll look like in 2025:

[NetMapel]

Originally Posted by mr.x2

They've only stolen our title in being the Western Canada financial headquarters, all those office jobs stolen from us.......my ultimate dream for Calgary's Bow, how it'll look like in 2025:

In some cruel way, I feel the same too. Calgary's boom is due to the oil sand. I wonder what they plan to do to sustain their economy when we start switching to alternative/sustainable energy source ?

[Metro-One]

Well Vancouver should work harder at brining some of those office jobs back, i wish that there were no delays anywhere across canada in all of our new towers, that being said, if all of Vancouver's signature towers have are hitting snags, its nice to know we are not alone!

[Mike K.]

That article just rehashes a Globe and Mail story about H&M's attempts to secure funding. This doesn't necessarily equate to the project having stalled but it is in dire need of a cash injection.

[Wooster]

Why the celebration? You guys are douche bags to cheer problems in another city. Very pathetic.

Actually, the tower is not on hold. H & R is in a position that they pretty much have to finish the tower (there's a $40 million per year penalty to EnCana each year after 2012 if they don't) so they either have to liquidate other assets, sell part or all of the Bow project or secure financing from another source.


BMO Capital Markets

H&R continues to focus most of its efforts on building out the “Bow” for $1.4 billion ($353 million spent to date) and its Phase III BellCanada expansion for $135 million ($92 million spent). The REIT expects to incur a further $390 million on these projects over the next 12 months, which will take its total Bow investment to $700 million (50% of budgeted costs). Near-term funding is expected to come from cash ($28 million), unused lines of credit of $204 million ($29 million already drawn),and the pending sale of 110 Bloor Street West for $79 million (expected gain $38 million, netproceeds over $50 million). There is no guarantee that the REIT’s line of credit will be renewed when due in August 2009. The REIT has the following options to fund theremaining build-out cost on the Bow: refinance/sell other assets including Bell Phase III (we estimate $0.01-0.02 of dilution per $100 million sold), secure construction financing or sell an interest in the Bow (neither of which is easy in the current environment), and if necessary, cut distributions/raise new equity. Options not mentioned include: 1) stop construction, which we understand could result in an annual $40 million or $0.27/unit penalty being paid to EnCana if the project is not completed by August 2012, and/or 2) attempt to sell 100% of the project for a loss, which could presumably be what the REIT has invested thus far ($353mm or $2.42/unit). With the REIT’s unit price “baking in” much steeper losses, this would appear to be a reasonable option. On the topic of the Boscov store closures, it appears that there willbe more near-term dilution until the lender has released H&R from its obligations.Conference call today at 9:00am ET. Tel: 416-644-3427 or 1-800-796-7558.

RBC Capital Markets

A Large Development Project Which Will Consume Substantial Capital Over The Next Three Years – The other
integral part of H&R REIT is “The Bow” development project. The Bow is a 2 million sf office tower which is being
constructed for EnCana Corporation in downtown Calgary. The project is 100% pre-leased by EnCana, which will occupy
and pay rent beginning in 2012. The Bow has a development budget of $1.4 billion. To June 30th, H&R had invested
approximately $300 million in The Bow. H&R is obligated to deliver The Bow to EnCana. It does not appear that there is
any means by which H&R could extract itself from this obligation. Moreover, the economic consequences of doing so
would, in our opinion, be far worse than completing the project, even though we estimate the project will have a final
market value which is less than construction costs...As an aside, H&R is also obligated to construct a second component to this project, referred to as the “south block”. This is a comparatively smaller project, which we believe includes about 700 parking stalls and 100,000 sf of commercial space. For ease of discussion, the remainder of this comment will simply focus upon The Bow. However, investors should recognize that H&R has additional, yet comparatively modest funding commitments with regard to the south block.

[Wooster]

Originally Posted by NetMapel

In some cruel way, I feel the same too. Calgary's boom is due to the oil sand. I wonder what they plan to do to sustain their economy when we start switching to alternative/sustainable energy source ?

When alternative energy sources begin to enter the market more, I'm quite sure the energy companies that are headquartered in the province will fully be part of that evolution. No company like Shell, or EnCana is just going to pack up and go out of business when oil and gas are no longer the dominant energy sources.

Sorry, but your dream of failure for your neighbours isn't upon us.

[Cowtown_Tim]

Originally Posted by NetMapel

In some cruel way, I feel the same too. Calgary's boom is due to the oil sand. I wonder what they plan to do to sustain their economy when we start switching to alternative/sustainable energy source ?

Same thing that sustains other cities like Winnipeg, Pittsburgh, Salt Lake, City..pick a city. You need to go read up on what happened to Pittsburgh when the steel industry collapsed.

BTW, I'm really disappointed in some of the posts on this thread. It's one thing to be positive about youir own city (as many Calgarians and Vancouverites are) It's another to be jumpoing for glee because the Bow has run into some financing issues, which btw doesn't mean it's on hold. Nobody on the Calgary forum jumped in gless when the Jameson house was postponed. Everyone was disappointed.

Some of you here..and you know who you are, have shown a real lack of class.

[Metro-One]

Go Bow Go (and Jameson)

[sconadian]

Wow Mr. X cheering for the Bow to go under??? Really???

[PPAR]

The news about the Bow in Calgary is scary- not because I think the Bow will not get done...The contractual arrangements between Encana and H&R are such that completion is financially better for everyone involved than suspending the project- and money always wins the day.

What is worrysome is that one of the largest office developers in Canada is having trouble financing a project that has a guaranteed 25 year lease with one of the largest corporations in Canada. If there are issues with that one- it means there is a lot of trouble everywhere else in the country.

[Volksboi]

I agree 100% with the Calgary forumers.....I find it very tacky for our Vancouverites to celebrate other citys losing or running into issues with there key projects. Every city in the world is in the same boat right now, and theres no need to point in laugh at situations our own city is struggling with as well. Lets get a little class Vancouver.

[rather_draconian]

Yes, I have never been to Calgary but I find it quite pathetic and tasteless for people to be deriving pleasure out of other's misery. How would you like it if Calgarians were cheering about the Jameson being cancelled?

[WhipperSnapper]

There have been hundreds of proposed buildings to be built within the next few years, are they being stalled as well due to financial problems?

The big three (highrise construction wise) all have stalled construction sites and I suspect the worse is still to come. Lehman's bust, specifically, was a huge blow.

[Doug]

Originally Posted by mr.x2

They've only stolen our title in being the Western Canada financial headquarters, all those office jobs stolen from us.......my ultimate dream for Calgary's Bow, how it'll look like in 2025

When was Vancouver even close to being Western Canada's financial headquaters? Winnipeg is the only city other than Calgary that could ever have made that claim.

[1ajs]

hey come on guy... the bow thing is being blown outa proportion the mess its in is cause people are being stupid and pulling out there money when they shouldn't be oye

guys natral gas is were albertas boom start oil was the icing on the cake its still not much difrent then a year ago

[muzhav84]

hey, i never posted that article to celebrate!! i posted it to show the nature of the industry right now, and the fact that projects people thought were 100% solid actually have underlying weakness, not due to the demand, but because of the financial mess of credit markets... it is under construction, but until that loan comes through they won't be able to continue... thats all im saying, i am not trying to diss calgary at all... of course it is in all partie's best interest to have this project move ahead, but if the funding doesn;t come through, they will need to look at other ways to complete...

i am just highlighting the global market conditions and how even the most sure things can be at risk so quickly... sorry if people took it the wrong way..

[Architype]

On the bright side, all this economic mess will slow down urban sprawl.
Also, Vancouver will have more class when it gets a new mayor today.

[muzhav84]

Here is an article from Calgary about it, showing their civic point of view... as i said, they haven't cancelled or anything, but it is just another ugly reminder of how things could play out...

Bow's struggles loom large over city's psyche
Don Braid, Calgary Herald
Published: Saturday, November 15, 2008

The company building the mammoth Bow tower is having trouble borrowing cash for construction. And that's one fearful sign of trouble for downtown Calgary.

If the gold-plated companies involved in this deal can't secure financing, who can? The troubles faced by H&R REIT are the most dramatic signal yet that credit markets are virtually frozen in Canada.

There have been rumours for months this iconic $1.1 billion project might be on shaky legs.


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Font:****EnCana, which sold the project to H&R and will occupy the building, has always remained upbeat.

On Friday, though, H&R revealed what financial analysts have suspected for some time: "At present there are no financing arrangements in place on any of the REIT's development projects, and the current difficult economic conditions have impacted H&R's financing strategy." Construction costs for the Bow are currently $20 million a month, set to rise to $30 million next year -- a fierce pace of spending. Estimates are that H&R needs $800 million.

Nobody is saying so officially, but if H&R can't finance the project by one means or another, construction obviously would have to slow or stop.

Today, the Bow is a mammoth covered hole with some steel about to rise. All 58 storeys of the structure are still to be built. If the project stalls, the soaring tribute to western enterprise will be an ugly civic scar marking the end of another Calgary boom.

At EnCana, emotions are surely mixed -- chagrin on one hand, but some relief on the other.

There was criticism when EnCana sold the project to H&R last February for $70 million.

Today, that looks like a smart move. Uneasy with the thought of being a property developer, the energy giant shrewdly slipped off the hook.

But the Bow is also EnCana's grand plan for a corporate monument in the downtown, as well as the company's future home.

EnCana is locked into a deal to rent the building from H&R for 25 years. An EnCana team keeps constant tabs on the project with both H&R and the builder, Matthews Development Inc.

Although EnCana's financial stake might be minimal, a crisis in the project would be a severe blow to both its reputation and corporate morale.

The crazy thing is, there is no rational reason this project shouldn't roar ahead.

H&R is a solid, reputable company that owns 34 office buildings, 124 industrial sites and 122 retail properties, mainly in the Toronto area. It holds more than 41 million square feet of revenue-producing property.

For a company like that, the EnCana deal would normally be spun gold. Canada's largest, most stable energy company will pay steadily escalating rent on the entire building for a quarter-century.

Bankers would have genuflected before this setup just a few months ago. Now they spurn it. The times are insane.

H & R isn't done yet. The company says it can continue to use cash and a line of credit while it tries to secure financing. Alternatively, H&R might sell or refinance other assets, or even sell an interest in the Bow.

Calgarians can only cross their fingers.

The Bow carries Calgary's downtown psychology on its rising beams. If they fall, this town will go awfully quiet.

[email protected]

[Wooster]

Originally Posted by muzhav84

hey, i never posted that article to celebrate!! i posted it to show the nature of the industry right now, and the fact that projects people thought were 100% solid actually have underlying weakness, not due to the demand, but because of the financial mess of credit markets... it is under construction, but until that loan comes through they won't be able to continue... thats all im saying, i am not trying to diss calgary at all... of course it is in all partie's best interest to have this project move ahead, but if the funding doesn;t come through, they will need to look at other ways to complete...

i am just highlighting the global market conditions and how even the most sure things can be at risk so quickly... sorry if people took it the wrong way..

It's not you - nothing wrong with posting the article.. It's mr. x2, Cypherus, and NetMapel who made the comments.

Fortunately, some other Vancouver forumers came to condemn those comments.