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SKYE Condominiums and Hyatt Place Hotel


monsoon

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.... They have a completely different target market (northern retirees). ..
No not really. The vast majority of highrise condos sold in Myrtle Beach are to part time residents and investors who rent out the places. They also sell to families, yups and much of the same kind of demographic that buys condos in Charlotte.

The vast majority of retirees that move to Myrtle Beach tend to go to single story apartments, single family homes, and senior oriented communities that cater to this crowd. I know this first hand because my parents are very involved in the senior community in MB and nobody in this demographic wants to live in a condo highrise.

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But the difference is that in Charlotte, there are multiple industries in places that generate the jobs that would allow people to afford the condos uptown. Myrtle Beach doesn't have it to that extent since their industry revolves around a service economy. IMO, people who live and work there are going to be much less likely to be a condo in a tower on the beach. I'm certainly not saying that it doesn't happen.

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According to the evening news, there has been a lawsuit filed against the people developing The Park by a group of the purchasers that paid deposits. It accuses the Park developers of all kinds of wrongs including continuing to sell units even after they knew there were liens being placed on the property that would affect the outcome of the project. It sounds as if they are not going to get their money back as it has already been spent.

Which evening news ran this report, is there a link?

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A trustee sale requires a 5% down payment upon winning the public auction. Then there is 30 days to come up with the other 95% after all time extensions from upset bidding has closed.

I would not be surprised if the lender was willing to open the auction at 20 million, in order to avoid "catching" the Park in an incomplete state. But then a winning bidder needs a million in cash to deposit with the trustee. If they don't come up with the remainder, the trustee can call for a new auction, and use the down payment of the first bidder to cover the cost of holding a new auction.

If Verna knows some deep pocketed individual or venture capital group with the funding to complete this, why did he sell his stake in the first place?

Attempting to buy The Park back sounds like wishful thinking to me. The money involved is large, and time constraints are short.

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^ This might have been the cheaper way to refinance if he had a new lender signed up. A risky finance gap filling measure.

Who knows, however, I do feel confident that we will see this project completed by someone if not Verna within the next 2 years. Too much work has been done, and after enough bleeding has occured, someone will want it off their books bad enough to make it financially attractive to a developer.

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Sad part is Verna had chances in the past couple of years to bring in equity and development partners to help complete this project, and from what I was told, allowed his ego to prevent it. Now where is he...

It would also be foolish, IMO, at this point for him to reaquire the project to try and finish it -- who in their right mind would sign up for a condo with him as the developer after he just screwed all the buyers out of their deposits?

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Lets get everyone in UP to chip in to buy it. Then we should have a design contest on UP for the plans to complete it and let every member vote on their favorite (think of the way Threadless.com does business) and then complete the tower based on the winning entry. A true experiment in the current era of design. I'll see your $5 Tozmervo and raise you $10.

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The most likely outcome is the lender will get it back. Nobody is going to buy something this large, without a thorough physical inspection and number crunching. It's also a tougher environment in general to secure construction financing. Most lenders are not going to be in the "gambling mood" that they were a few years ago.

Assuming the auction takes place August 7, then sometime in September the lender will have their trustee's deed for The Park, and can take offers. It'll probably be several months later at best, before it's sold.

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Reading all the news this morning about the upcoming auction on the Park, etc., I was trying to imagine... who the h*ll in their right mind would buy this project and try to finish it - you stand the chance of all signed up buyers just bailing or suing for their money back, and then would end up in the hole for the cost of the unsold units until you can unload them all. And in this market condition, that would take a while I'm sure. But then I realized - if a reputable condo tower building were to purchase it and diligently pursue finishing out the building, a lot of previous signed up buyers may hold on and stick it out, since they've locked in contracts at 2004 prices. Then you'd hopefully make out OK as the builder... am i thinking about this correctly?

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I'm thinking there is a "risk discount" that any developer would price into his purchase price of this development. No one is going to pay actual value for the reasons you mentioned above, but someone would purchase it as a substantial reduction that would give them flexibilty in regards to being able to refinance and cover a large contingency of problems that may be present.

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Anybody have an idea as to what the parts of this equation would be?

Estimated sale value at auction

+

Cost to complete construction

-

Money flow from residents completing their purchase (if they don't drop their contracts)

_________________________________________________________________

=

Developer's profit

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Sounds like the primary lender is foreclosing, which would mean eveything junior to this position would be wiped out. This would include most likely everything but property taxes, IRS liens, etc and in my opinion wipe out any deposits as well unless they were secured in the loan covenants which is possible. :angry:

If this sale does go through, I'm 100% sure the lender takes it back. However, I wouldn't rule out some last minute wheeling and dealing on part of Verna, the lender & the GC to cobble something together to avoid the sale. If it goes to sale via foreclosure everyone will loose!

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A trustee sale requires a 5% down payment upon winning the public auction. Then there is 30 days to come up with the other 95% after all time extensions from upset bidding has closed.

I would not be surprised if the lender was willing to open the auction at 20 million, in order to avoid "catching" the Park in an incomplete state. But then a winning bidder needs a million in cash to deposit with the trustee. If they don't come up with the remainder, the trustee can call for a new auction, and use the down payment of the first bidder to cover the cost of holding a new auction.

Maybe interesting to note that the face value of the note is the +$30 mill amount and as its a construction loan its very possible not all that has been drawn on. There is also another roughly million $ note lined up to foreclose as well. I agree the lender might bait the auction trying to get a buyer. Looking at the loan its a syndicated deal from a community bank. Given this and some the language on the Deed of trust I would say they do not want this thing back, but unfortuately they probably won't have a choice.

For the Trustee Sale, the Trustee can call for the full amount anytime after the mandatory 10 day Upset Period. In this case I'm sure they would give ample opportunity for the bidder to come up with the balance.

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So what are the chances this building gets sold and is finally finished?

Good. The questions are really more of who and when. With this much invested and with such a good location, someone will want to pick up the pieces and the bank that ends up with this will want to get something out of it. I can't say i'd imagine anyone is wanting to jump in right now in this economy, but who knows. I think if someone was likely to move on this now it might be more likely as high-end apartments rather than condos --but who knows.

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