Irvine?s Central Park West on hold until market turns

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[quote author="Joe33" date=1194372308]Lennar is insane. It is exactly this type of product - high density, less desirable location, huge hoa, that is going to suffer the most in this downturn.



The carrying costs have to be huge. I can't think that there is any way this will end well for Lennar. The longer they wait, the worse it is going to get.



My office overlooks this site. Used to be a beehive of activity. Much quieter now.</blockquote>


I will just stand behind my quote from a year ago on this project.



The workers fixing the signs is just damage from the wind. They are still making progress....but very slowly.



The high rise will likely end up a rental project for at least the next 5+ years until the market stabilizes.
 
[quote author="Joe33" date=1223950575][quote author="Joe33" date=1194372308]Lennar is insane. It is exactly this type of product - high density, less desirable location, huge hoa, that is going to suffer the most in this downturn.



The carrying costs have to be huge. I can't think that there is any way this will end well for Lennar. The longer they wait, the worse it is going to get.



My office overlooks this site. Used to be a beehive of activity. Much quieter now.</blockquote>


I will just stand behind my quote from a year ago on this project.



The workers fixing the signs is just damage from the wind. They are still making progress....but very slowly.



The high rise will likely end up a rental project for at least the next 5+ years until the market stabilizes.</blockquote>


I wonder what they will do 5 years from now them market prices have stabilized at levels 50% below their projections from their financial proformas.
 
I called the office several weeks ago and they said they will have furnished models for the maxfield and granville units in the 2nd quarter of 2009 (this is a postponement from their prior forecast of being ready in the fall of 2008). It is unclear how soon after the models are ready that they will release them for sale.
 
The realistic prices of where they would have to go to move these things with any real velocity are probably already 50% below their original projections.



Eventually they will need to either sell the whole thing (the high-rise property) or they will get foreclosed and the lender will sell it off. I think ING originated the loan on Astoria and it was for over $700K per unit. No way the lender gets out without taking a big loss. Lennar/Intergulf's position is already effectively gone.



But as long as they have term remaining on their loan and they are not in default, then they will just continue to wait and hope for a miracle.
 
[quote author="Joe33" date=1223959093]The realistic prices of where they would have to go to move these things with any real velocity are probably already 50% below their original projections.



Eventually they will need to either sell the whole thing (the high-rise property) or they will get foreclosed and the lender will sell it off. I think ING originated the loan on Astoria and it was for over $700K per unit. No way the lender gets out without taking a big loss. Lennar/Intergulf's position is already effectively gone.



But as long as they have term remaining on their loan and they are not in default, then they will just continue to wait and hope for a miracle.</blockquote>
Ah yes, that great emotion of HOPE. Lennar also better hope that they don't go BK while continuing to wait for the market to pick up.
 
[quote author="usctrojanman29" date=1223964686][quote author="Joe33" date=1223959093]The realistic prices of where they would have to go to move these things with any real velocity are probably already 50% below their original projections.



Eventually they will need to either sell the whole thing (the high-rise property) or they will get foreclosed and the lender will sell it off. I think ING originated the loan on Astoria and it was for over $700K per unit. No way the lender gets out without taking a big loss. Lennar/Intergulf's position is already effectively gone.



But as long as they have term remaining on their loan and they are not in default, then they will just continue to wait and hope for a miracle.</blockquote>
Ah yes, that great emotion of HOPE. Lennar also better hope that they don't go BK while continuing to wait for the market to pick up.</blockquote>


They?ll do seller financing if you want to lump 6 or 7 units together.
 
[quote author="eclipxe" date=1223942707]I drove by today and there were some worker on the outside - looks like they were fixing some of the signs on the fence...nothing on the buildings themselves.</blockquote>


And that's about all they'll be doing. Rumor on site has it that construction is shutting down and getting fenced off in about two weeks.
 
http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?
 
[quote author="tkaratz" date=1241845044]http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?</blockquote>


Leasing them out by the hours to Craig list providers. Executives get their relieve during office hours and still return home to his wife on time.
 
[quote author="bkshopr" date=1241846204]

Leasing them out by the hours to Craig list providers. Executives get their relieve during office hours and still return home to his wife on time.</blockquote>


I'm telling Grace O'Malley. You're going to get it when you get home. :-P
 
[quote author="bkshopr" date=1241846204][quote author="tkaratz" date=1241845044]http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?</blockquote>


Leasing them out by the hours to Craig list providers. Executives get their relieve during office hours and still return home to his wife on time.</blockquote>


TIC would not appreciate the competition to the Island Hotel's day business.
 
[quote author="tkaratz" date=1241845044]http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?</blockquote>


Your confusion is shared by Lennar. They have no idea what they are going to do. Ultimately, I believe these will be sold off at fair market value, and someone will need to recognize a tremendous loss.
 
[quote author="IrvineRenter" date=1241846879][quote author="tkaratz" date=1241845044]http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?</blockquote>


Your confusion is shared by Lennar. They have no idea what they are going to do. Ultimately, I believe these will be sold off at fair market value, and someone will need to recognize a tremendous loss.</blockquote>
So how much in losses does Lennar need to absorb via Centeral Park West and the Great Park before it's BK time? Btw, I started seeing the first commercials on Cox Cable these past couple of days for these CPW condos so I guess they turned on the PR machine. Oh the luxurious picture they try to paint by being an owner of one of those great units. haha
 
[quote author="tkaratz" date=1241845044]http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?</blockquote>
Honestly, if I was the developer I would be tossing the keys back to the lender/s like a hot potato (especially if the loan was non-recourse). Sometimes it's best to know when to cut bait and bail.
 
Lennar should just demolish CPW. no_vaseline will never be able to afford it anyway, not even the basement studio conversion.



<object width="325" height="250"><embed src="http://www.youtube.com/v/youtube" type="application/x-shockwave-flash" width="325" height="250"></embed></object>



<strong>zovall: You've been banned. You were warned yet continue to make personal attacks. I would have sent you a PM but you have turned them off in your settings. </strong>
 
[quote author="usctrojanman29" date=1241847672][quote author="IrvineRenter" date=1241846879][quote author="tkaratz" date=1241845044]http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?</blockquote>


Your confusion is shared by Lennar. They have no idea what they are going to do. Ultimately, I believe these will be sold off at fair market value, and someone will need to recognize a tremendous loss.</blockquote>
So how much in losses does Lennar need to absorb via Centeral Park West and the Great Park before it's BK time? Btw, I started seeing the first commercials on Cox Cable these past couple of days for these CPW condos so I guess they turned on the PR machine. Oh the luxurious picture they try to paint by being an owner of one of those great units. haha</blockquote>


Those commercials were for Astoria I believe which was partitioned and sold off to Intergulf if I remember correctly. Saw some lights on at night and the building looks occupiable. Anyone know if anyone is living there? One other thing about towers is that once people start moving in, the HOA fee burn starts to take effect. DRE won't let you phase one building typically, therefore the developer is responsible for paying HOA fees for unoccupied units. $1000 bucks a unit starts to hurt after a year.



Good comments AI.
 
I did hear the Lennar structured most of these deals that they were involved in so that they had little or no exposure. In short, it wasn't their money. Lehman Brothers, or whoever has their toxic assets now, is going to eat much of the loss here.
 
[quote author="usctrojanman29" date=1241847963][quote author="tkaratz" date=1241845044]http://www.calculatedriskblog.com/2009/05/mothballed-condo-project-in-irvine-ca.html



CR posted a video on CPW today. I had always been convinced that this project would be sold to capital investor or REIT as an apartment community but that doesn't seem likely at this point due to excess demand in the IBC and lack of capital. However, what seems even less likely is that any significant number of this product is going to be sold anytime soon due to the excess supply of single family detached and SF attached throughout the area. I wouldn't be so pessimistic on the project if these were entry level townhomes or flats, but i remember that the sales office was showcasing some very high end units.



Anyone have the inside scoop as to what the developer's strategy or market perspective may be? Any opinions on what the developer's strategy may be? (okay, probably a stupid question to be asking this crowd, but humor me, pretend you are the developer. What could you be thinking about the future RE market in Irvine that convinces you to go ahead with the construction of 100's of luxury condo units in a dominantly office neighborhood?</blockquote>
Honestly, if I was the developer I would be tossing the keys back to the lender/s like a hot potato (especially if the loan was non-recourse). Sometimes it's best to know when to cut bait and bail.</blockquote>


From loans that i dealt with, most of these loans were recourse loans which is why the rates were so low and the terms were so favorable. Lenders still came out looking like idiots.



My theory is that you have a bunch of people at Lennar that pushed this project along to keep their jobs. "This project cost to much not to build!"



Great Park is going to be taken over by TIC who's going to use the land to locate all their required affordable home units at Portola, Orchard Hills, etc. Should have been an airport, think of all the jobs that could have been created. *sigh* well at least our great grand childeren have a 50/50 shot at getting a park.



Good to great comments AI
 
[quote author="IrvineRenter" date=1241862380]I did hear the Lennar structured most of these deals that they were involved in so that they had little or no exposure. In short, it wasn't their money. Lehman Brothers, or whoever has their toxic assets now, is going to eat much of the loss here.</blockquote>


Not sure who the construction lenders was, but MacFarlane Partners typically Joint ventured and provided the equity and effctively limited Lennar's exposure to zero. However, again, the loans are probably recourse and backed by Lennar. John Laing had a similar JV structure with millions in debt backed by the company. Now it's being pushed towards chapter 7 to be torn apart by the creditors.
 
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