Signature Tower

[ATLBrain]

^Foreign money is drying up because the $ is in free fall against the other major currencies. Any asset held that is bought in sold in dollars is losing value relative to the rest of the world.

This is the one point where I would disagree with you. With real estate on the downslide, the devalued dollar makes property very attractive to foreigners. Of course, I'm making a distinction between foreigner buyers and lenders. Nevertheless, Atlanta has seen a significant bump in the number of foreign buyers. Mayber Mr. Giarratana should advert in the Financial Times/ToL/International World Herald, etc. You get the idea. LOL

[monsoon]

^Investors usually don't invest in an depreciating asset.

[ATLBrain]

^Investors usually don't invest in an depreciating asset.

Let me know when property stops depreciating. Obviously, nobody knows where that point is, and the only way you or I have of knowing is through lagging data. That's why it's called investing risk capital. Your point is taken, but you can't argue that foreign investors are NOT buying real estate in the USA.

[monsoon]

....Your point is taken, but you can't argue that foreign investors are NOT buying real estate in the USA.

I am not trying to and that is a diversion from the topic at hand. The question was on why foreign money was not being invested in the Signature tower. You disagree which is fine, but the money isn't there, so the situation speaks for itself.

[Richard Lawson]

^Foreign money is drying up because the $ is in free fall against the other major currencies. Any asset held that is bought in sold in dollars is losing value relative to the rest of the world. It makes for some good purchases here by foreigners, but speculative real estate development isn't one of them. This is one of the reasons the condo market collapsed in Miami.

Good point ... I hadn't realized that foreign money help fuel the Miami condo market.

[monsoon]

Good point ... I hadn't realized that foreign money help fuel the Miami condo market.

There was a huge European investment craze in South Florida which has dried up.

[Richard Lawson]

I am not trying to and that is a diversion from the topic at hand. The question was on why foreign money was not being invested in the Signature tower. You disagree which is fine, but the money isn't there, so the situation speaks for itself.

:)

I was making more of a general statement that perhaps foreign money could be an option, more specifically, perhaps on the hotel side of it. If I'm not mistaken, the condos and the hotel would have different pots of money. So while not on the condo side, maybe it could come on the hotel side. I have no idea whether foreign money is an option. Just wondering out loud.

[monsoon]

^That reply was not directed at your response.

[ATLBrain]

I don't know much about the South Florida market.

Back to Signature, my point is that a market may exist for foreign buyers. While I thought I made the clear distinction between individual (foreign) buyers and lenders, who knows if Mr. Giarratana has turned to foreign lenders? And the term I used was buyers, as distinguished from investors (Read, speculators). Although, I'm not optimistic that much foreign demand exists for this particular building, Richard has made the correct point that foreigners are buying property in major American cities.

On the point about "investors/speculators" WRT Signature, I would be very surprised to see much flipping there even if it gets to the construction phase. I believe this for several reasons, not the least of which is the high price and slow initial demand. Is this an obvious reflection of a slowdown in the Nashville (DT) market? Who knows, as there hasn't been a project with units this expensive in Nashville heretofore. If I'm correct, it appears that Mr. Giarratana can't rely on a significant "pop" from a "land rush" to get units (a'la Viridian, Icon).

[HopeGardensGuy]

I don't know much about the South Florida market.

Back to Signature, my point is that a market may exist for foreign buyers.

A little off-target here, but...

ATLBrain, this isn't directed at you, specifically, but at the concept of foreign buyers being the salvation of some of the higher end projects either planned or underway in the downtown area. (West End Summit, in particular, is one that comes to mind.) I've always found that idea interesting. How many folks from outside the US who can afford buying condos in the $500,000 and up market are interested in spending that kind of money in Nashville?

Would these buyers typically be looking at second or vacation homes? Is Nashville enough of a vacation destination such that these buyers would be looking to invest in an urban residence?

I compare these to folks buying at one of the shores (Carolina coasts, Mississippi or Alabama on the Gulf, etc.) or in the mountains (Asheville, NC, would be one example). What envision as more traditional vacation home destinations

Is Nashville, or any other second tier city (as opposed to the top tiers of NY, Chicago, LA, San Fran, etc) able to draw investments of this magnitude?

I'm an urban guy, and try to envision what I would want to do should I have that kind of money. It's an interesting discussion.

Curious...

[Richard Lawson]

^That reply was not directed at your response.

I know... That's was more to all in terms of why I brought it up in the first place.

[ATLBrain]

How many folks from outside the US who can afford buying condos in the $500,000 and up market are interested in spending that kind of money in Nashville?

Is Nashville, or any other second tier city (as opposed to the top tiers of NY, Chicago, LA, San Fran, etc) able to draw investments of this magnitude?

I think your questions are spot-on. As far as I can tell, nobody (at least here on this forum) knows the depths of foreign (buyers) demand in Nashville (or for that matter in Atlanta, or even NYC). Relating to Nashville, Signature may have a potential pool of demand from overseas. As I mentioned above, I'm not optimistic that Giarratana will find many buyers from abroad. Of course, currency exchanges favor foriegn buyers looking for a good deal in real estate in the USA. I also expect (don't know for sure) that foreigners would want to seek those deals in vacation or leasure properties. However, it appears that urban areas (non leisure per-se) are attracting foreigners for other reasons (business, second home, and yes, even investments). I say investments because there has been a coincident depressing of R-E values in most markets as noted above among many other sources (i.e. People would be buying for the long term investment). Having said this, I don't think Signature will find a lot of buyers from abroad. I just don't know of any real draws for foreigners to Nashville along the lines I've noted above.

I don't want to get too far away from Richard Lawson's very good point that there may be foreign capital that sees investment in a Nashville hotel (aka Palomar) as sound. Who knows?

[Nashville_maestro]

I agree with you Brian. The potential of overseas foreign investors weighed against the time and money seeking them out just isn't worth it. Any foreign investors that come along are great but Tony G. shouldn't go out of his way to attract them IMO.

Does Mr. Giarratana ever come on here and post? There are plenty of good thoughts tossed around here that he could benefit from.

[dxartist]

I agree with you Brian. The potential of overseas foreign investors weighed against the time and money seeking them out just isn't worth it. Any foreign investors that come along are great but Tony G. shouldn't go out of his way to attract them IMO.

Does Mr. Giarratana ever come on here and post? There are plenty of good thoughts tossed around here that he could benefit from.

honestly, he probably doesn't even know this site even exists, but then again, it wouldn't surprise me if he did know. If I were a foreign investor, I wouldn't invest in the U.S. right now either for reason mentioned above.

[smeagolsfree]

honestly, he probably doesn't even know this site even exists, but then again, it wouldn't surprise me if he did know. If I were a foreign investor, I wouldn't invest in the U.S. right now either for reason mentioned above.

FWIW, Tony does know about the site and might have posted a couple of times but he definitely reads it. He knows many of the older posters personally and takes comments on this web site as well as others very seriously. I know this thread is of particular interest to him. A couple of the posters in the forum actually work for Tony directly or indirectly as subcontractors.

BTW, Tony came to a forum meet and gave us one of the first looks at the Signature a couple of years ago.

[Richard Lawson]

honestly, he probably doesn't even know this site even exists, but then again, it wouldn't surprise me if he did know. If I were a foreign investor, I wouldn't invest in the U.S. right now either for reason mentioned above.

He knows about the site. One of his guys used to post on here (Dave Koellein). I think Dave probably still watches it.

As for foreign investment, and I realize this is off topic some, but I'll have to check around. If I'm not mistaken, when the dollar is low, investors stream over because of the favorable exchange rate. Convert to dollars. Buy real estate and sell when dollar rises. That's way oversimplifying it. But if the dollar is low against the Euro, converting to dollars and buying an good income producing property here would seem to make sense. Keep the dollars here until the dollar rebounds then convert. I think that sounds about right. Someone correct me if I'm off the mark.

[Nashville_maestro]

He knows about the site. One of his guys used to post on here (Dave Koellein). I think Dave probably still watches it.

As for foreign investment, and I realize this is off topic some, but I'll have to check around. If I'm not mistaken, when the dollar is low, investors stream over because of the favorable exchange rate. Convert to dollars. Buy real estate and sell when dollar rises. That's way oversimplifying it. But if the dollar is low against the Euro, converting to dollars and buying an good income producing property here would seem to make sense. Keep the dollars here until the dollar rebounds then convert. I think that sounds about right. Someone correct me if I'm off the mark.

That sounds about right. Any current forign investments in the housing secter would have to be sat on for a good while though as the market is going to take a long time to mend. This would rule out potential forign investers looking for a quick cash in.

[Plasticman]

The hotel plan is actually something I hadn't thought of (I guess that's why Mr. G. is who he is and I'm not a developer). To me it sounds viable if he is able to make up the difference in revenue via a hotel investor.

I don't know how that will play out because if he adds floors to the hotel what happens to any contracts for the condos that were sold on those floors? Does he bump them up to the new lower floors or are the contracts void and he loses those particular ones? I would venture he they will have to be given an upgrade or something in order to renegotiate.

[Richard Lawson]

That sounds about right. Any current forign investments in the housing secter would have to be sat on for a good while though as the market is going to take a long time to mend. This would rule out potential forign investers looking for a quick cash in.

Yeah I don't think they'd jump in on a condo deal even if it was three years out on construction because of the question mark on condos. I guess the same could be said of hotels too. You never know what the market will be three years out.

[Shuzilla]

That sounds about right. Any current forign investments in the housing secter would have to be sat on for a good while though as the market is going to take a long time to mend. This would rule out potential forign investers looking for a quick cash in.

I'm thinking that the time to construct the tower might be sufficient for the domestic mortgage markets to recover. An international client attracted to US investments due to favorable exchange rates would also profit from a recovery in the (luxury) condo market should one happen to correspond to the completion of ST. If ST breaks ground at the end of the year, and completion is projected for spring of 2011, is it reasonable for an investor to speculate that a unit therein would sell for substantially more in 2011 than today? And, by 2011, is it reasonable to speculate that the dollar will be stronger than today, making a better selling climate for an overseas investor?

Investment is risky. Buying US assets when the dollar is weak against your currency, selling when it strengthens, and betting for a moderate increase in the ability of Americans to obtain mortgages over the next three years may not be an unreasonable amount of risk to some.

[producer2]

The hotel plan is actually something I hadn't thought of (I guess that's why Mr. G. is who he is and I'm not a developer). To me it sounds viable if he is able to make up the difference in revenue via a hotel investor.

I don't know how that will play out because if he adds floors to the hotel what happens to any contracts for the condos that were sold on those floors? Does he bump them up to the new lower floors or are the contracts void and he loses those particular ones? I would venture he they will have to be given an upgrade or something in order to renegotiate.

I am pretty sure that the hotel portion is a management only scenario. Tony will have to pay for the build out and will essentially lease the space to Kimpton.

[monsoon]

.... If ST breaks ground at the end of the year, and completion is projected for spring of 2011, is it reasonable for an investor to speculate that a unit therein would sell for substantially more in 2011 than today? And, by 2011, is it reasonable to speculate that the dollar will be stronger than today, making a better selling climate for an overseas investor?....

Obviously they don't think it is reasonable or the investment would be there. It's hard not to notice when a developer says he is going to build one of the tallest buildings in the world and if foreign investment was going to happen it would have happened by now. Building investors are more interested in what is going on in Dubai, Europe, and cities in Asia.

In regards to the dollar falling (its in free fall) one has to look at the reasons behind it. It's a combination of excessive spending, borrowing, and living beyond our means. (it doesn't help that we also purchase huge amounts, including oil from overseas now) This isn't going to change until some tough decisions are made in this country to substantially curtail some of this activity and a lot of people won't be happy about it. Will it happen in 3 years, I don't know. This is why the investment isn't here. Nobody knows.

[Richard Lawson]

I am pretty sure that the hotel portion is a management only scenario. Tony will have to pay for the build out and will essentially lease the space to Kimpton.

Yes and the folks on the floors would be bumped up

[Flowers]

I am pretty sure that the hotel portion is a management only scenario. Tony will have to pay for the build out and will essentially lease the space to Kimpton.

i think you are correct about the hotel simply managing the hotel operation for a fee on the gross revenue generated, but i don't think there is typically a lease involved that would subject the hotel flag to any operational risk. if either tony or alex were able to lease out the hotel to the flags they'd be much closer to their goal of obtaining financing since the banks could underwrite these large companies. regardless of how tony settles on the mix of hotels/condos he will ultimately have to raise the debt and equity to build both. as monsoon mentioned, despite the time and money that has been spent he still appears to be in the preliminary stages of figuring this one out.

we keep talking about the sales/revenue side but remember he split with the contractor months ago over a cost impasse. i haven't heard of a new contractor team being annointed but that will probably require months of pricing work to get to a good comfort factor about costs irrespective of where he may or may not be on sales.

[Hankster]

He knows about the site. One of his guys used to post on here (Dave Koellein). I think Dave probably still watches it.

As for foreign investment, and I realize this is off topic some, but I'll have to check around. If I'm not mistaken, when the dollar is low, investors stream over because of the favorable exchange rate. Convert to dollars. Buy real estate and sell when dollar rises. That's way oversimplifying it. But if the dollar is low against the Euro, converting to dollars and buying an good income producing property here would seem to make sense. Keep the dollars here until the dollar rebounds then convert. I think that sounds about right. Someone correct me if I'm off the mark.

I agree totally with this thinking. And also take this into account. Because of the depreciated dollar, it is now cheaper to manufacture in the US than just about everywhere else in the developed world. US business is poised to capitalize on that and look for US exports to increase dramatically in the future. Once the world sees that happening the dollar will go up, and those who invested while the dollar was low will reap huge profits. Now is the time to be investing here, in my opinion.