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NewTowner

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Thanks guys... he does have about half the approximately $35m. I've seen the numbers.

So, was he telling you "about half" the truth or is he expecting a rich aunt to die between now and July ? Since his bankruptcy, the only project he's completed is the Viridian. I think they made about $8-10 million on that but most of the profit went to Borders and his equity sources, so best case Tony might have netted $2 million on the profit and his fees after taxes. Then there was Bennie Dillon. That turned out to be very skinny as he and Novare ended up having to finish out the units more then originally planned. But let's say Tony netted another million after tax there. The only other project is the Cumberland and considering he hasn't sold the $1.25 million PH and a few others yet I'm not sure he's cleared any profit yet on that deal. And remember, he's been running a company with an overhead of 5-7 people for the last 5-7 years too. So, even with some of the cash coming from his parking lot mgmt co how does all that even come close to adding up to $17 million ?

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So, was he telling you "about half" the truth or is he expecting a rich aunt to die between now and July ? Since his bankruptcy, the only project he's completed is the Viridian. I think they made about $8-10 million on that but most of the profit went to Borders and his equity sources, so best case Tony might have netted $2 million on the profit and his fees after taxes. Then there was Bennie Dillon. That turned out to be very skinny as he and Novare ended up having to finish out the units more then originally planned. But let's say Tony netted another million after tax there. The only other project is the Cumberland and considering he hasn't sold the $1.25 million PH and a few others yet I'm not sure he's cleared any profit yet on that deal. And remember, he's been running a company with an overhead of 5-7 people for the last 5-7 years too. So, even with some of the cash coming from his parking lot mgmt co how does all that even come close to adding up to $17 million ?

You're over analyzing a bit. He's done some other small deals around -- single family homes on his church's property, etc. But you're looking at it as strickly cash. A developer can put equity into a deal from leverage elsewhere. And it's his company not him personally.

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You're over analyzing a bit. He's done some other small deals around -- single family homes on his church's property, etc. But you're looking at it as strickly cash. A developer can put equity into a deal from leverage elsewhere. And it's his company not him personally.

Sorry, I was just looking at it like a banker. His company is him. It doesn't have much to offer other than it's participation in the deals he's trying to develop. If he has other unencumbered assets I seriously doubt the construction lender is going to seriously entertain having him pledge those in lieu of cold hard cash equity. However, he could leverage those to generate some cash to put into the ST. But then that new debt (to generate the cash) must be serviced for 3 or 4 years or however long it would take him to cash out of ST.

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Wow, did he actually go bankrupt once?

Oh yeah in a big public way too. The plan before the Cumberland was an office tower. It was just bad timing. The demolition company that that took down the old office building forced the BK. It all went south pretty hard and they put the squeeze on him. Some of his equity and lenders stayed with him though and he retained control of the property and they were involved with the Cumberland. Long story, more details than I can go into here. I'd hate to refer you to my former employer but I did a Q&A with him a couple of years or so ago in which I asked him point blank about that stuff. I also wrote about it in 97 for an NY Times story on resurgence of downtown living with Cumberland as a centerpiece.

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Sorry, I was just looking at it like a banker. His company is him. It doesn't have much to offer other than it's participation in the deals he's trying to develop. If he has other unencumbered assets I seriously doubt the construction lender is going to seriously entertain having him pledge those in lieu of cold hard cash equity. However, he could leverage those to generate some cash to put into the ST. But then that new debt (to generate the cash) must be serviced for 3 or 4 years or however long it would take him to cash out of ST.

I understand ... One part of the commerical lending stuff that I still have difficulty understanding sometimes is the mezzanine debt stuff -- or bridge funding. It leaves me scratching my head. But there's a piece of that in there. He's putting cash into the deal, it's just leveraged cash. Anyway, to me, it's scarily complicated and the CFO probably earns his keep.

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Wow, did he actually go bankrupt once?

I'm surprised you didn't know that.

This leads me to other questions for those on both ends of the spectrum in regard to confidence in this project.

I see a lot of lengthy posts on here detailing the different oppinions on how this will be financed and such. But other than learning on this forum, what other education in such matters do people like jeepers, metro, Richard, Hankster, etc. have? I majored in Accounting but now work in Quality Assurance and continue to take courses in that area. But none of that makes me financially savvy when it comes to how large projects are financed or some of the more creative ways to bring them to fruition.

In other words, Jeepers, you sound knowledgeable but where did you garner your knowledge? Same for the other main posters on this thread.

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I understand ... One part of the commerical lending stuff that I still have difficulty understanding sometimes is the mezzanine debt stuff -- or bridge funding. It leaves me scratching my head. But there's a piece of that in there. He's putting cash into the deal, it's just leveraged cash. Anyway, to me, it's scarily complicated and the CFO probably earns his keep.

Mezzanine debt is basically a hybrid of debt and equity. Let's consider a $100 million project. A construction lender is generally going to be willing to finance 75% of this cost. So the developer still needs to come up with $25 million in equity. Mezzanine lenders are generally willing to cover $15 million (15% of cost) of this leaving the developer to come up w/ $10 million (10% of cost). All of this must be cash not a pledge of other assets. The mezz lender will charge an annual rate between 15-20% (compared to half that for the construction lender) but will only do this for developers with a proven track record that have demonstrated they can handle what they're taking on; I contend Tony doesn't meet this test for this project. They also cover the developer up with brutal coventants that basically give them full control, quickly, if he slips up. Private equity in lieu of mezz is generally a little more expensive (25% to 35%) than mezz but a whole lot more friendly and preferable if a developer can access it. Tony's local history, as you have noted, would probably make this option difficult.

In other words, Jeepers, you sound knowledgeable but where did you garner your knowledge?

Real estate and banking.

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Mezzanine debt is basically a hybrid of debt and equity. Let's consider a $100 million project. A construction lender is generally going to be willing to finance 75% of this cost. So the developer still needs to come up with $25 million in equity. Mezzanine lenders are generally willing to cover $15 million (15% of cost) of this leaving the developer to come up w/ $10 million (10% of cost). All of this must be cash not a pledge of other assets. The mezz lender will charge an annual rate between 15-20% (compared to half that for the construction lender) but will only do this for developers with a proven track record that have demonstrated they can handle what they're taking on; I contend Tony doesn't meet this test for this project. They also cover the developer up with brutal coventants that basically give them full control, quickly, if he slips up. Private equity in lieu of mezz is generally a little more expensive (25% to 35%) than mezz but a whole lot more friendly and preferable if a developer can access it. Tony's local history, as you have noted, would probably make this option difficult.

Real estate and banking.

Thanks for the primer. Mezz stuff is part of that murky world in which I've sat through presentations and thought somebody has figured out a complicated way of making a boat load of money. Of course, the group giving the presentation later went broke primarily because of the CMBS fallout a few years ago. Talk about a challenge in explaining to editors the CMBS stuff. Then throw in mezz financing, TIF and other assorted aspects of real estate.

The goal on the project 10-15% on the mezz. I do have to challenge on the contention. I would figure that Viridian, Bennie-Dillon, Cumberland and to some extent Encore now, would give him the track record. But I don't know how picky the mezz guys are.

And to Plasticman -- I've written about real estate in Nashville going on 11 years and while I know a lot about how deals are put together, each one is different and I can get only as close as a developer or developers will let me. Some have let me get closer than others.

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....

In other words, Jeepers, you sound knowledgeable but where did you garner your knowledge? Same for the other main posters on this thread.

This is really off-topic. If you are really interested in a discussion of people's backgrounds, then create a topic for it in the coffee house. and pose your questions there.

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The goal on the project 10-15% on the mezz. I do have to challenge on the contention. I would figure that Viridian, Bennie-Dillon, Cumberland and to some extent Encore now, would give him the track record. But I don't know how picky the mezz guys are.

I also work in real estate finance and was in a structured financing group for a time. The Mezz lenders are essentially buying into the idea that the project will go very well and increase in value during the term of their loan. A construction lender (75% LTC or LTV) is generally just taking the risk that the project will be completed and meets lower expectations. For this project for instance, the construction lender needs perhaps 65% or 70% of the units to sell for them to be paid off, while a mezz lender would need it to sell up to perhaps 90% or higher. The hotel component plays in there as well in terms of how strongly it performs and how easily it could be refinanced once it is up and running for a year or two.

So, a mezz lender needs to believe pretty strongly in the depth of the condo market in Nashville since they are taking a good bit more risk. I know that my company is pretty much no longer doing loans for condo development in coastal cities or areas that have seen significant building in the last year or two. So, Nashville's growth in this market to date and currently in progress may be the thing that creates some concern for a project of this scale being successfull if the market is perceived as being overbuilt.

As a side note, I have heard of some European lenders doing large projects in the U.S. now due to a very favorable exchange rate. So, they are willing to be a bit more aggressive.

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Maybe TG should go to the Marks Family for money. They seem to be buying up everything in DT.

Forget those ballooney rides... I can't imagine what his insurance must be costing for those. Seems to me that a series of ads in international/nation publications would be a much better use of the money. Too bad also that the plans for the Convention Center are still up in the air. In that case, he could be promoting some of the higher end units to corporate entities (within walking distance of SoBro).

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Maybe TG should go to the Marks Family for money. They seem to be buying up everything in DT.

Forget those ballooney rides... I can't imagine what his insurance must be costing for those. Seems to me that a series of ads in international/nation publications would be a much better use of the money. Too bad also that the plans for the Convention Center are still up in the air. In that case, he could be promoting some of the higher end units to corporate entities (within walking distance of SoBro).

"Too bad also that the plans for the Convention Center are still up in the air." No pun intended right?

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It would seem to me to be cheaper and less risky just to have an IMAX type of thing showing a virtual view instead of taking people 70 floors above downtown in a balloon. And then that same movie could be shown anywhere in the world.

It looks like the forum is back open. Well they could IMAX it but balloon rides are fun and memorable, thus why sales tool. We'll see if it works. I went in the sales office the other day and they have pictures of the views of downtown at certain heights. You will definitely be able to see a lot from way up there. Of course, some of those views are million dollar ones -- the price of condos up at the top.

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Have any of you guys up there in Nashville seen the Signature Tower balloon over head? If so, how does it look? I think it will be an excellent marketing tool. Tony told about this one at the forum meet early this month, but asked us to not "let the cat out of the bag". He said he was having the balloon sewn up in England at that time.

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Have any of you guys up there in Nashville seen the Signature Tower balloon over head? If so, how does it look? I think it will be an excellent marketing tool.

No, but I did see that tacky ERA realty balloon at one point. I think Tony's balloon gimmick will go down as one of the goofiest and most desperate moves ever by a developer. If anyone in Atlanta was even paying attention to the ST team's attempts to draw them into a media controversy a year ago I can hear them laughing out loud now. Tony better have a lot more up his sleeve than hot air balloons.

As to whether the tethering idea will work I don't think he considered the wind tunneling effect that all the tall buildings around that site will generate. Anyone that's been on the Viridian pool deck often will understand what I mean. Like someone said I can't believe he was able to insure these thrill rides.

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^What corporations use hot air balloons to take clients for rides? Other than for advertising I can't imagine that any large corporation would routinely if ever think that putting a client in a hot air balloon would gain them their businees. Balloons are dangerous and unpredictable and many people won't ride in them. If IBM is trying to win a major contract, they are not going to throw in a carnival ride as part of the deal.

Maybe I am missing something but it does sound like something that one would see at a country fair and not something that someone would do that is proposing to build a major skyscraper in the USA. I think it will hurt his credibility more than anything else.

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No, but I did see that tacky ERA realty balloon at one point. I think Tony's balloon gimmick will go down as one of the goofiest and most desperate moves ever by a developer. If anyone in Atlanta was even paying attention to the ST team's attempts to draw them into a media controversy a year ago I can hear them laughing out loud now. Tony better have a lot more up his sleeve than hot air balloons.

As to whether the tethering idea will work I don't think he considered the wind tunneling effect that all the tall buildings around that site will generate. Anyone that's been on the Viridian pool deck often will understand what I mean. Like someone said I can't believe he was able to insure these thrill rides.

Thus why the balloon was able to be downtown when I did the News2 spot. I saw the balloon in Elmington Park next to the ERA one. It's a nice looking balloon as to whether it will work as a sales and marketing tool we'll see. I've never seen it done. But by comparison, the guys with Cumberland Yacht Harbor -- Tower -- has put up a boat to win for the first 100 buyers.

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I have yet to see the balloon. Did see a van of some sort parked on the lot today, and I think it had something written on the side regarding balloon rides. This was during the downtown home tour.

Also... went to the sales center today during the tour. One of the agents there was telling us it's 30% sold. She mentioned the top floor belonging to Ming Wang, and another of the top units belonging to someone from Dollar General. They plan to push sales until they hit 60%, and then hold back a bit... once construction starts, they seem to think the units will sell themselves it sounded like. People will "have to have it" when they see cranes and what not.

She also said they are trying to come up with a name for the restaurant right now... and that it will be of an Italian flair.

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I think it may have been a little to windy yesterday to fly the balloon. They had a small balloon out and it was blowing right toward the DT Pres. Church.

From what the sales Rep., said this thing is going to happen in July because the 60% mark is a self imposed goal. Now I know what you are going to say, but this is just what I was told when I was there. Let

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I think it may have been a little to windy yesterday to fly the balloon. They had a small balloon out and it was blowing right toward the DT Pres. Church.

From what the sales Rep., said this thing is going to happen in July because the 60% mark is a self imposed goal. Now I know what you are going to say, but this is just what I was told when I was there. Let

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That's the key. When the shovel goes in the ground, some of the doubt will start to fall away. I for one believe Mr. G. has found some creative financing that works for him and his project but that's only an opinion. July will answer a lot of questions.

Don't worry, before anything breaks ground you will have big news announcements out of Tony's team many months before construction actually starts announcing who the equity and lending sources will be. They can name the restaurant, arrange furniture and even celebrate condo buyers one at a time but until they name the equity and the lending sources I think the skepticism about this project is going to grow by the week. And look for pony rides and ferris wheels on the site soon if the balloon rides don't do the trick.

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