Signature Tower

[Jeeper12]

^ There is a difference between having a commitment letter from a construction lender (or lenders as is likely in this case) and having satisfied all the conditions precedents to funding which would all be stipulated in the commitment letter. The bank issuing the commitment wouldn't be required to fund the first dollar until the developer satisfied each and every requirement. Once this commitment is in hand it kind of helps the developer to go get all the other puzzle pieces needed to assemble the deal. Can you imagine how much easier Tony's job would be to raise equity and sell units if he could at least name the lender and the terms (buyer deposit requirement, equity %/LTV, etc.) of the financing he had obtained ? That's why I'm so certain he doesn't have one. If he did, there'd be too many reasons not to hold back; prospective partners and buyers would feel much more reassured about jumping into the deal. The same would be true of publicizing his $80 million equity raise. However, unlike the lenders, I could see an equity partner prospect being more leary about having their identity disclosed with so much apparent uncertainty about the prospects of getting these units sold and financed. Anyone sophisticated enough to have the $'s needed on this deal doesn't like to look foolish, which would be the reaction if things collapsed and never started. So, it's more logical for him to use a lender announcment (however flimsy and riduled with difficult to achieve pre-funding req'mnts) to generate buzz and re-establish some momentum if he ever obtains one. According to his own pub he's been looking since last Nov.

But again, if there is a bank commitment letter to be had on this deal one likely would have already been generated and for all the reasons mentioned and more, and we'd have heard who it was. Lenders are a fickle bunch and with development projects you'll often either have 10 banks wanting to do the deal (lend the money) or none. Even when there are none there is usually a desperate institutional soul out there somewhere (especially these days) stretching ridiculously to try and make things work. But even they also generally know they are alone and in the driver's seat, thus making the hapless developer's task all that much more difficult.

[ATLBrain]

^^ I'm feeling like you are correct on this (Unfortunately!!). Beautiful design, but I'm having doubts this thing will ever see daylight. Would one of you guys ask Tony if we could have it in Atlanta when you guys are done with it?

[Richard Lawson]

Obviously I wasn't trying to insult anyone but you've managed to misinterpret my comments. My perspective on the "media" is they follow stories such as the Signature Tower Project based on spoon fed information and even in that light, they often make mistakes. I've seen several links to TV stations up there and the reports get the floor count wrong, the height wrong, and even to this day show one of the older designs. Continuing in that light, the media (again meaning the local TV stations, some of the online news sources, etc.) aren't out just digging for every little snippit of the latest floor tile change on the 58th floor. They take the information as they receive it and would only go looking for it if they happen to think a story is there.

I haven't followed this thread very closely. I just happened to start looking through tonight. I for one try avoiding the spoon fed stuff, trying instead to get out ahead of everyone. But right now with the project, it is still a work in progress. Everyone, I think, should know that the architects do one thing and then the GC looks at the drawings to set the construction price. Things always change in projects especially of this magnitude. I haven't talked to Tony in some time about the project, primarily because I've been focused on the Sounds debacle. TG just opened the sales office and the general contractor was working on the final construction price. In the next few weeks, look for something big on the marketing front from TG. Let's just say there's a lot of hot air involved. I'll leave it at that.

[Dale]

'hot air' on who's part ?

[Richard Lawson]

Tony G. Not as bad as it sounds. I'm having a little fun with the words.

[producer2]

There is an article in today's Nashville Business Journal that has Tony repeating the same things he told us at the forum meet a couple of weeks ago. It explains his sales goals before ground breaking (same thing he told us, 60% "lenders are not good faith based") That he will go to contract with his reservations once the HUD/Federal paperwork is complete in the next few weeks and that he still expects a 4th of July groundbreaking. Now all of you skeptics go have your field day!

[smeagolsfree]

There were two items that had to be addressed. One was the HUD act. This had some certain implications to it and I cannot remember the initials that were used and the other was the Tennessee Condo Act, I think is what it was called. The article was very upbeat and positive. He is at 35% right now out of the 60%. I think that is dollar amount not number of units. I should have bought a copy of the NBJ so I could remember what the two areas they had to comply with were.

IMO, if this does not break ground by the 4th of July, it will break ground this year, and the big "IF" is the economy. If that stays stable, I think it

[Richard Lawson]

There were two items that had to be addressed. One was the HUD act. This had some certain implications to it and I cannot remember the initials that were used and the other was the Tennessee Condo Act, I think is what it was called. The article was very upbeat and positive. He is at 35% right now out of the 60%. I think that is dollar amount not number of units. I should have bought a copy of the NBJ so I could remember what the two areas they had to comply with were.

IMO, if this does not break ground by the 4th of July, it will break ground this year, and the big "IF" is the economy. If that stays stable, I think it

[Jeeper12]

^ A few comments about the comments in the last few posts:

I know this must sound like a broken record to some of you but every so often posters (and even some newspaper writers) make the mistake of comparing the developers current publicized reservation count with the developer's assessment of how many binding contracts (units or dollars) he thinks he'll need to attract a lender and equity partners. I saw a Trump quote several months ago acknowledging that (for him) only about 30-35% of his reservations turn into contracts. I seriously doubt Tony will outperfrom Trump in this regard.

The anticipated contruction duration of ST is between 30 and 36 months so trying to peg the mortgage market half a decade from now is obviously hard to do. I have contended all along that Tony will never find lending institutions willing to bank the deal based upon 5% deposits even with 2% more at topping out. Financing uncertainty (as to rates) for the condo buyers (even prime ones) in addition to the sky high pricing (for Nashville) are among the reasons that Tony (if he ever secures a lending committment) will ultimately have to come back to his interested buyers and explain that the deposit must be at least somewhere between 10 and 20 percent. His only way around this would be to secure much more equity than the $80-$90 million he's already chasing. But those deep pocketed camps aren't going to be blind to the risk of flimsy deposits either.

Finally, projects are already being cancelled all around the country (FL, NV, GA, CA, NY, DC, VA, AZ). Some markets are holding up better than others but even places like Charlotte are starting to get saturated and have lenders and developers (wise experienced ones) pulling in their horns. Many lenders I speak with in Nashville are very leary about the shadow units (units sold to speculators) that remain on the horizon (Encore, Icon, Bristol West End, Adelicia), especially considering how long Viridian seems to be taking to clear this inventory out. So, I'd look for even the most aggressive condo lenders to begin tightening their underwriting standards soon. Again, the top tier lenders (not so desperate for business) are already beginning to pass on marginal deals sponsored by inexperienced development teams.

There may be a cast of thousands dying for an urban Nashville lifestyle but they apparently aren't willing (or able ?) to make a purchase at any price; see earlier Viridian re-sale comments. Interestingly, most of the "downtown dwellers" in cities quoted in the Downtown Partnership's study came to own their units long before the condo stagflation reared its head. As another poster wisely noted, nearly all the new buyers here are going to have to make sense of these new prices with wages that haven't come close to keeping pace with the rising cost of condos. That may not help developers of new projects, like Rythm, ST, WES and several others that need to see the market firmly absorb lots of new units well above $350/sf and beyond to be confident in the continued strength of the Nashville condo market.

[producer2]

^ A few comments about the comments in the last few posts:

I know this must sound like a broken record to some of you but every so often posters (and even some newspaper writers) make the mistake of comparing the developers current publicized reservation count with the developer's assessment of how many binding contracts (units or dollars) he thinks he'll need to attract a lender and equity partners. I saw a Trump quote several months ago acknowledging that (for him) only about 30-35% of his reservations turn into contracts. I seriously doubt Tony will outperfrom Trump in this regard.

The anticipated contruction duration of ST is between 30 and 36 months so trying to peg the mortgage market half a decade from now is obviously hard to do. I have contended all along that Tony will never find lending institutions willing to bank the deal based upon 5% deposits even with 2% more at topping out. Financing uncertainty (as to rates) for the condo buyers (even prime ones) in addition to the sky high pricing (for Nashville) are among the reasons that Tony (if he ever secures a lending committment) will ultimately have to come back to his interested buyers and explain that the deposit must be at least somewhere between 10 and 20 percent. His only way around this would be to secure much more equity than the $80-$90 million he's already chasing. But those deep pocketed camps aren't going to be blind to the risk of flimsy deposits either.

Although I agree with a portion of your post, you are not hearing or reading what has been said regarding going to contract and the already established lenders for the Signature project. Tony has stated on more than one occasion that the project is a minimum of 36 months (hence the HUD/ Federal issue) , that once this was solved then they would go to contract (with 10% for floors thru 42, I believe and 15% for those above that), he has also stated that while he has committments from lenders they want him to have 60% of the units contracted before construction loans will be granted. Your theories will get tested, but many of the elements you claim are not in place in fact are and in a relatively short time frame we will see if it happens.

[Jeeper12]

Although I agree with a portion of your post, you are not hearing or reading what has been said regarding going to contract and the already established lenders for the Signature project. Tony has stated on more than one occasion that the project is a minimum of 36 months (hence the HUD/ Federal issue) , that once this was solved then they would go to contract (with 10% for floors thru 42, I believe and 15% for those above that), he has also stated that while he has committments from lenders they want him to have 60% of the units contracted before construction loans will be granted. Your theories will get tested, but many of the elements you claim are not in place in fact are and in a relatively short time frame we will see if it happens.

As to the construction duration I was simply correcting an earlier assertion by Mr. Lawson (2 yrs vs 3 yrs) and commenting on how this duration might relate to buyer mortgage risk, again a point he made in a previous post.

I'm not exactly clear on the balance of your post. You seem to be saying that Tony has changed his deposit policy increasing his deposits from the 5% & 2% at topping out, as reflected in his reservation agreements, to a minimum of 10% everywhere and higher for certain units. If, in fact, he has now done this no release or article I'm aware of has reported it. If true, the fact that he is more than doubling his deposit requirement is probably more newsworthy than reporting that 500 people visited his sales center, especially when that particular article didn't even report on sales activity during that period...but what do I know.

In any event, I hope you are right about this because it suggests that Tony has at least come to the realization that his old deposit policy won't cut it with lenders. However, I remain quite skeptical that he has indeed secured a bonafide lending commitment for reasons enumerated in an earlier post. For the uninitiated, lenders typically issue a commitment letter which is usually subject to a littany of borrower requirements (loan to value%, presale req'mnt, etc.). In order for the commitment to be enforceable (subject to those borrower requirements) the borrower (developer) is required to pay a fee to the lender, which is negotiable but usually somewhere between a point and a 1/4 percentage point of the loan. If the deal never goes forward during the negotiable time period agreed to in the commitment (usually a year or less) the bank keeps the fee. Given the advantages on several fronts to naming the lender (assuming one exists) I can only surmise that Tony either doesn't have one or is not yet so confident in his deal going forward that he wants to part with such a substancial fee at this point. When (or if) he does this will be a good indication that his efforts to secure partners and lenders have reached an important milestone. He'll still have to fulfill the many preconditions of the commitment but, again, it will be an indication of some progress worthy of a big pr release or even an article to help boost momentum.

[producer2]

I should not start rumors I can not substantiate so I will rescind my statement about the deposits until I can verify. I will stick with my statement about knowing if your theory is correct in the next 90 days though. Sorry if I misspoke and I will see if I can get further clarification. I am going off of an actual sales meeting I attended rather than any comments Tony made at our forum meeting.

[elguapo731]

Fresh from the Tennesseans website. One more positive step for you nay sayers....

http://www.tennessean.com/apps/pbcs.dll/ar...NESS01/70423033

I know this alone won't support the investment / financing needed, but it can't hurt any...

[producer2]

I'm not exactly clear on the balance of your post. You seem to be saying that Tony has changed his deposit policy increasing his deposits from the 5% & 2% at topping out, as reflected in his reservation agreements, to a minimum of 10% everywhere and higher for certain units. If, in fact, he has now done this no release or article I'm aware of has reported it. If true, the fact that he is more than doubling his deposit requirement is probably more newsworthy than reporting that 500 people visited his sales center, especially when that particular article didn't even report on sales activity during that period...but what do I know.

I stand corrected, the deposits are as stated in your post and on the website.

[franktown]

Fresh from the Tennesseans website. One more positive step for you nay sayers....

http://www.tennessean.com/apps/pbcs.dll/ar...NESS01/70423033

I know this alone won't support the investment / financing needed, but it can't hurt any...

I don't understand how this is different that what was established before, can someone explain it? From what I understood, Hotel Palomar was already a 'done deal,' so to speak; was that a false assumption?

[Jeeper12]

I don't understand how this is different that what was established before, can someone explain it? From what I understood, Hotel Palomar was already a 'done deal,' so to speak; was that a false assumption?

I agree with you...after I read it I had to check the date of the post too make sure it wasn't 2006. All I can guess is that it must have been a slow news day. The Tennessean, CP and Nashville Post all jumped on this like it was some big announcement. Until Tony finds partners willing to fund the equity needed to attract a bank to provide a construction loan for the hotel (and the condos, of course) it doesn't matter how long of a term his Palomar Mgmt. contract is. The hotel company isn't investing a dime into the project so it's just a piece of paper without debt and equity to build it.

[Jeeper12]

I stand corrected, the deposits are as stated in your post and on the website.

That's too bad. Believe it or not I had hoped that Tony had actually begun to realize he'd need more buyer deposit to attract a construction loan. Sooner or later he will have to face this IMO.

[Plasticman]

Did anyone else notice the article said the bottom "12" floors are to be occupied by the hotel as opposed to what I thought were to be ten floors?

[monsoon]

One more positive step for you nay sayers....

...

You know there is no need to wrap a newspaper link with an implied insult. I don't think there are any "nay sayers" on this forum as you might put it, but there are people here who are realistic in what it takes to get a project such as this built. We don't need "I told you so" posts especially when there isn't any new news here.

I really wish we could go 24 hours without someone trying to cause trouble in this thread.

[elguapo731]

You know there is no need to wrap a newspaper link with an implied insult. I don't think there are any "nay sayers" on this forum as you might put it, but there are people here who are realistic in what it takes to get a project such as this built. We don't need "I told you so" posts especially when there isn't any new news here.

I really wish we could go 24 hours without someone trying to cause trouble in this thread.

monsoon you are quite touchy. I didn't mean to try and stir the pot or insult anyone. I am just saying that there are quiet a few post thoughout the gazillion of pages on this thread that have put this project down and condemed it, and who knows those who don't think this will materialize may be right. I for one am not 100% sure this project will fly but i hope it does. It was an updated article on todays local paper, the first progress given to the public in quiet awhile. I don't see why it was such a big deal, in my book and where I grew up a "nay sayer" ain't that bad of a word. I shouldn't have to defend a simple comment posted in a conversational style. I wasn't trying to rub it in anyone face. As I stated, I know the news of the hotel alone won't get this project moving but it can't hurt that ink has been applied to the papers.

sorry if this ruffled a few feathers that isn't how I intended it to come across... Do you wish for me to delete the post???

[Richard Lawson]

I agree with you...after I read it I had to check the date of the post too make sure it wasn't 2006. All I can guess is that it must have been a slow news day. The Tennessean, CP and Nashville Post all jumped on this like it was some big announcement. Until Tony finds partners willing to fund the equity needed to attract a bank to provide a construction loan for the hotel (and the condos, of course) it doesn't matter how long of a term his Palomar Mgmt. contract is. The hotel company isn't investing a dime into the project so it's just a piece of paper without debt and equity to build it.

We treated it as routine. The hotel was a done deal last July. But the details in such things still had to be worked out. It does show confidence that the tower may actually get built. Here was how I jumped into the news: "As if the matter were ever in question, developer Tony Giarratana has made it official that Kimpton Hotel & Restaurant Group will have a Hotel Palomar in the planned Signature Tower."

I think he has the equity or at least certainly close. The guy working on that is the same one who did The Cumberland, a guy out of Chicago who is connected to the General Dynamics fortune if I recall correctly. That was the equity that went into The Cumberland anyway.

And it was a slow news day. We all know our readers though. People are very interested in every little thing on this project. Look for something from me later this week that really will be news on the project.

[Jeeper12]

We treated it as routine. The hotel was a done deal last July. But the details in such things still had to be worked out. It does show confidence that the tower may actually get built. Here was how I jumped into the news: "As if the matter were ever in question, developer Tony Giarratana has made it official that Kimpton Hotel & Restaurant Group will have a Hotel Palomar in the planned Signature Tower."

I think he has the equity or at least certainly close. The guy working on that is the same one who did The Cumberland, a guy out of Chicago who is connected to the General Dynamics fortune if I recall correctly. That was the equity that went into The Cumberland anyway.

And it was a slow news day. We all know our readers though. People are very interested in every little thing on this project. Look for something from me later this week that really will be news on the project.

Richard, with all due respect I think you do your readers a disservice by explicitly stating the hotel is a "done deal" considering that after almost a year of trying this developer apparently still has nothing to show for his efforts (wrt the hotel deal) but a run of the mill operating agreement from a hotel flag. Still no equity, still no development partner with experience developing hotels, still no construction loan. Just because the Chicago guy is still trying (for at least 6 months that we know about) doesn't mean he'll be successful. And, as you should know, the longer he's out there trying without success the tougher the job gets; even development projects have a shelf life. You say that he "has the equity or is at least certainly close". What evidence has been provided to make that a fair statement, or even logical ? I think your readers innocently assume that you (and your peers, frankly) know more than you are disclosing. I hope for your sake this turns out to be true.

I realize you and the other papers need to sell papers and subscriptions but you're a journalist first and it seems to me that your primary responsibility is to educate the public objectively and based upon facts, not simply feed their appetite for unsophisticated snippets that mislead the public about the true status of this project. I look forward to your "real news" later in the week.

[Richard Lawson]

Richard, with all due respect I think you do your readers a disservice by explicitly stating the hotel is a "done deal" considering that after almost a year of trying this developer apparently still has nothing to show for his efforts (wrt the hotel deal) but a run of the mill operating agreement from a hotel flag. Still no equity, still no development partner with experience developing hotels, still no construction loan. Just because the Chicago guy is still trying (for at least 6 months that we know about) doesn't mean he'll be successful. And, as you should know, the longer he's out there trying without success the tougher the job gets; even development projects have a shelf life. You say that he "has the equity or is at least certainly close". What evidence has been provided to make that a fair statement, or even logical ? I think your readers innocently assume that you (and your peers, frankly) know more than you are disclosing. I hope for your sake this turns out to be true.

I realize you and the other papers need to sell papers and subscriptions but you're a journalist first and it seems to me that your primary responsibility is to educate the public objectively and based upon facts, not simply feed their appetite for unsophisticated snippets that mislead the public about the true status of this project. I look forward to your "real news" later in the week.

Fair enough. The construction loan won't come until the solid reservations are in place. He has a relationship with Wachovia. That bank refinanced the parking lot earlier this year. And you're right, we don't always report what we know. A lot of times that has to do with the nature of what's going on. If things aren't solidied, reporting does more harm than good. It's a fine line sometimes and sometimes it gets crossed in the wrong way. This project has a lot of moving parts for sure. TG only recently got the construction pricing in place. I know he wants to get this thing done. Suffice to say, no matter what he's done to this point, his reputation is definitely on the line with it.

[Jeeper12]

^First, you are a gentlemen for responding to my comments. I recently commented on some things written by WW and, despite continuing to use UP as a source when convenient, he's never even bothered to address my questions. I guess he didn't really have a good answer.

As to your comments, I understand you think Tony is too personally invested for his efforts to be unsuccessful. However, several much larger industry titans (Jorge Perez, Donald Trump, etc.) have recently folded projects where they've spent a multiple of Tony's pursuit cost so I don't really buy your premise that it must succeed because he has bet his reputation that he will. But by foregoing the opportunity to educate the buying public and the public at-large how these deals fundamentally piece together, again, I think our media fails in its duty to inform...and the ad nauseum puff pieces (pr disguised as articles) subject you and your peers to fair criticism (I think) that despite 3 years of heavy development activity you're still completely unable to zero in on and report about the key facts and deal points that remain to be accomplished. Again, "done deal" and "as if there was any question" suggests a certainty about the outcome that I don't yet think is warranted. I agree that Tony's reputation hinges on this project succeeding but too much media cheerleading may also diminish your future credibility if things don't go as you apparently think they will. Thanks again for responding.

[atlrvr]

Not to jump into the conversation, but here goes. Reporters have sometimes conflicting responsibilities. One is to report the truth, and the other is to sell newspapers for their employers. This isn't so much of a conflict for someone reporting on say, crime, where there are multiple and constantly changing sources and the information is public knowledge, but in business reporting the dynamic is much different. I know a writer at the Charlotte Business Journal who sometimes isn't afraid to get dirty who also can't get his calls returned by a number of reputable developers. Why? At some point over his career, he has either reported on project uncertainties, or released info before being "fed" it by the developer. Developers, for a variety of legitimate reasons, like to control what is released in the press, and to not play their game leads to no longer getting phone calls returned, which can lead to finding a new profession.