The Vue

[SmellyCat]

I've heard 8 cash buyers have closed. No loans.

I'm flabbergasted that eight people would buy units that are priced 50% higher than the market. Something's eventually gonna have to give to reprice all these empty units to market - either the developer capitulates and reduces prices or he gets foreclosed on and the bank reprices the units down to market.

But still - people paying $800k for something today they could sell tomorrow for around $400-500k? Bizarre.

[dubone]

From what I am hearing, that 40-50% is just the extreme cases. Many units have come in with closer to 10% difference and the cash buyers were willing to accept that.

Now that lawsuits and no loan closings are occurring, I'm not sure if other cash buyers would be so generous.

[kermit]

Any news on the Vue? I have not noticed new occupied units.

Everything still locked up in litigation? I would think the leanholders are starting to get antsy?

[SmellyCat]

Any news on the Vue? I have not noticed new occupied units.

Everything still locked up in litigation? I would think the leanholders are starting to get antsy?

I drive past it just about every night. Typically I see roughly 8-10 units with the lights on.

[Urbanity]

I drive past it just about every night. Typically I see roughly 8-10 units with the lights on.

I live down the block from it and see about the same... only thing is that the 8-10 units always seem to change location and most appear to be empty. I truly think (though may be wrong) that they are turning lights on in different apartments each night to give it an appearance of people being there (or at least more people than actual residents).

[Bearcat]

I live down the block from it and see about the same... only thing is that the 8-10 units always seem to change location and most appear to be empty. I truly think (though may be wrong) that they are turning lights on in different apartments each night to give it an appearance of people being there (or at least more people than actual residents).

A recent article in the Observer seemed to suggest that closings had been occurring though at a slow pace but I can't find any evidence of that. Here is the link to the register of deeds and when you enter vue charlotte there is only a few recorded documents other than the Declaration and none of them are deeds. Does anyone know of ANY closings that have occurred ?

http://meckrod.manat...asp?cabinet=opr

[ES Charlotte]

A recent article in the Observer seemed to suggest that closings had been occurring though at a slow pace but I can't find any evidence of that. Here is the link to the register of deeds and when you enter vue charlotte there is only a few recorded documents other than the Declaration and none of them are deeds. Does anyone know of ANY closings that have occurred ?

http://meckrod.manat...asp?cabinet=opr

12 have closed. 5 to go in feb and 3 in march... thats the news

[Bearcat]

12 have closed. 5 to go in feb and 3 in march... thats the news

Where did you hear that ? I hope that is true but unless those 12 closings happened with the last 4-5 days we should be seeing this activity on the register of deeds website. I'm wondering whether the "news" is really just the hopeful intent of the developer and/or broker. After all, with so many months having passed it's gotta be really tough to get the first few folks to take the plunge so I can understand why they'd be saying that. Unfortunately for the developer the ROD's does their job a little too efficiently so it doesn't allow for much lag (less than a week usually) for the developer to puff the numbers.

Also, does anyone know what the general pricing of the presales were ? I'm thinking they generally ranged from $350/sf to $450/sf but would appreciate hearing from anyone with more specifics.

[ES Charlotte]

Where did you hear that ? I hope that is true but unless those 12 closings happened with the last 4-5 days we should be seeing this activity on the register of deeds website. I'm wondering whether the "news" is really just the hopeful intent of the developer and/or broker. After all, with so many months having passed it's gotta be really tough to get the first few folks to take the plunge so I can understand why they'd be saying that. Unfortunately for the developer the ROD's does their job a little too efficiently so it doesn't allow for much lag (less than a week usually) for the developer to puff the numbers.

Also, does anyone know what the general pricing of the presales were ? I'm thinking they generally ranged from $350/sf to $450/sf but would appreciate hearing from anyone with more specifics.

a reliable source, close to the project... all cash buyers... also, check out the concierge. ask for a residents name... he'll pull out a list of 12 people... sad but true... I wish this project the best

[Bearcat]

There may indeed be 12 people living in the building but that doesn't mean that 12 people have closed on units. Regardless of whether someone pays cash or gets financing, a deed gets conveyed from the seller to the buyer. The ROD's website is currently showing its activity current through 1/28/11. So it's possible that all 12 of those folks all closed on their units after 1/28, in which case we should start seeing those hit the website next week.

I don't wish the project any ill will but I do think that buyers ought to understand the difference between rumors and facts. I've seen too many early buyers take the brunt of the hits that the market correction has been imposing on these projects. The Vue seems like a terrific project, one of the nicer developments in the southeast I think, but buyers should be very carefull about making early buys in projects that appear destined for a major correction. I don't know how anyone could characterize this otherwise.

Caveat Emptor Here's the website again: http://meckrod.manat...asp?cabinet=opr The grantor you need to enter is Vue Charlotte.

Edited February 10, 2011 by Bearcat

[atlrvr]

I count 10 on the Register of Deeds. Where you are going wrong is Vue Charlotte is the building owner entity, which transferred ownership to Vue NC LLC for the invidual condo units once the declaration of condominium was completed.

The 10 is through 2/2/11. It seems possible 2 have closed since then.

Of the 10, 8 were to individual buyers, and 2 were to companies (either investors or people setting up companies to protect their identities).

Someone who has a vested financial interest could easily look at these deeds and determine the price paid and the individual unit, to determine what price per square foot is being close and if closed transactions correspond to what was generally quoted as pre-sell pricing.

[Bearcat]

That's very helpful. Thank you, atlrvr.

After a quick look at the dec and a handful of the deeds here's what I see: The developer borrowed $195M or about $360/sf. Most of the deeds I saw were at pricing of just below $500/sf. So we can probably assume that the develop expected to make about $50M in profit assuming a sellout averaging $475/sf. They appear to need an average of $375/sf to make no profit, lose all their equity, but get the bank paid off. Fascinating stuff we're observing if you think about it. It's like a game of multimillion $ chicken going on right now between this developer/lender and the Charlotte condo buying public.

In 5 years I suspect the market will have rendered its verdict as to what this project at this location is "worth" to prospective owners. In the short run though, I think a combination of circumstances (bad economy, too many units delievered too soon (probably) and other factors) will probably force this project through a period of significant discounting in order to accellerate the absorbtion of the project to a point where the debt is either paid off or reduced to a level that the lenders deem gets them "out of the woods" so to speak on a risk basis. If the Vue follows the typical pattern of others that have been similarly situated it will close some modest percentage of its presales prior to unveiling a program that gets aggressive about pricing to jumpstart sales again. It's obviously impossible, or at least impractical, to do these things simultaneously. And there is more incentive for MCL to hold off if the contracts allow for the developer to sue for performance even though there may or may not be good ILSA defenses buyers could avail themselves too. Developers are also generally an optimistic bunch and this one may or may not have yet accepted that discounting will be necessary.

All of this is to say that it remains to be seen whether +/-$475/sf will be sustainable for this project. I hope for the sake of those who have elected to close that it does. But as you can see from above, every closing that the developer can generate above that $375/sf mark reduces his debt basis in a way that allows him more breathing room with his lender and increases the likelihood that he can recover some invested equity and perhaps still make some of the original profit that was forecast, even if an auction or heavy discounting are required to get there. As a prospective buyer sitting on the sidelines, unencumbered by being a party to a presale contract, it sure seems to me that the best deals to be had in this project will reveal themselves in another quarter or two.

Edited February 11, 2011 by Bearcat

[vuebuyer10]

I thought I was aware of all discussions regarding the Vue, but I guess not, since I just found this one. Some great information and discussion going on here!

If you aren't already aware of it, vuebuyer.wordpress.com is the blog where the pre-sales buyers go to get the latest scoop on the Vue. For Vue junkies, this is definitely worth a read. It is written by yours truly, one of the 200 or so pre-sales buyers at the Vue. It was started so all the pre-sales buyers had a place to go to exchange and share info.

I'll follow the discussions here and if I can add any insights I'll be glad to. You all seem to be doing pretty well on your own though. Thanks!

[mad_park]

The Observer is reporting that a judge has ruled that the Vue can't force buyers to close, but it can keep their deposits. http://www.charlotte...out-of-vue.html

16 of 400+ units have closed so far. Won't this affect the HOA costs at some point? Or is the builder obligated to cover the costs until all of the units sell? (I guess it is in his best interest to do so)

Edited March 31, 2011 by mad_park

[vuebuyer10]

The Observer is reporting that a judge has ruled that the Vue can't force buyers to close, but it can keep their deposits. http://www.charlotte...out-of-vue.html

16 of 400+ units have closed so far. Won't this affect the HOA costs at some point? Or is the builder obligated to cover the costs until all of the units sell? (I guess it is in his best interest to do so)

The Developer owes the HOA for all unsold units. For now though, they aren't being paid by anyone. There are only 16 units closed. Imagine if the Developer had to pay HOA on almost 400 units. The real problem now is that how are they going to sell any more. Folks interested in the Vue should follow the vuebuyer.wordpress.com blog. It is a fascinating topic and there is much drama ahead.

[Bearcat]

The Developer owes the HOA for all unsold units. For now though, they aren't being paid by anyone. There are only 16 units closed. Imagine if the Developer had to pay HOA on almost 400 units.

I doubt this to be the case. Typically, the developer doesn't pay HOA fees on unsold units until the project has been turned over to the Association, which usually occurs after about 75% of the units have closed or a period of a few years passes. Until then, new buyers pay HOA fees and the developer funds the difference out of his project budget. So, if the building continues to be staffed, utilitites are functioning and the property seems reasonably well maintained, the developer's budget is still funding this. I'm sure the bank loan included a line item to cover these costs for some reasonable period of time. Interest rates being so much lower than what the bank probably required them to assume has probably created a cushion that, in effect has probably bought more time to get the project turned over. But even when there isn't any $'s remaining in the loan the developer will have to fund this cost (invest new equity) or risk being pushed out immediately by the bank. And even then, the bank will almost certainly fund that cost to protect the value of it's collateral and ensure the units can be sold. There's no question though that at some point several hundred thousand $'s of carry each month for HOA and taxes will pressure the developer, the bank or both to capitulate to the pricing demands of the market.

Big game of chicken going on right now. That court decision had to sting.

[SmellyCat]

I doubt this to be the case. Typically, the developer doesn't pay HOA fees on unsold units until the project has been turned over to the Association, which usually occurs after about 75% of the units have closed or a period of a few years passes. Until then, new buyers pay HOA fees and the developer funds the difference out of his project budget. So, if the building continues to be staffed, utilitites are functioning and the property seems reasonably well maintained, the developer's budget is still funding this. I'm sure the bank loan included a line item to cover these costs for some reasonable period of time. Interest rates being so much lower than what the bank probably required them to assume has probably created a cushion that, in effect has probably bought more time to get the project turned over. But even when there isn't any $'s remaining in the loan the developer will have to fund this cost (invest new equity) or risk being pushed out immediately by the bank. And even then, the bank will almost certainly fund that cost to protect the value of it's collateral and ensure the units can be sold. There's no question though that at some point several hundred thousand $'s of carry each month for HOA and taxes will pressure the developer, the bank or both to capitulate to the pricing demands of the market.

Big game of chicken going on right now. That court decision had to sting.

Assuming the developer does eventually capitulate and finally drops their price demands to market, what happens to the 8-10 people that have already closed on units? Is there any recourse for them to get refunded the difference between what they paid and what the unit pricing will drop to. Seems unfair for these people since they actually did honor their contracts.

[Bearcat]

Assuming the developer does eventually capitulate and finally drops their price demands to market, what happens to the 8-10 people that have already closed on units? Is there any recourse for them to get refunded the difference between what they paid and what the unit pricing will drop to. Seems unfair for these people since they actually did honor their contracts.

None. I could literally show you hundreds of examples all over the country where this exact situation has played itself out...a small group or even as much as a 30-40% of old contracts close and then when the bank and developer are mostly certain that their efforts to cajole or in some cases threaten (with specific performance litigation if contract provides for it) early buyers will no longer bear fruit, they capitulate to the market (what else can they do ?) and prices collapse. All the early buyers can do is hope that 5-10 years down the road they can recover their original investment. Also, it appear that this lawsuit may have settled the issue of forcing buyers to close, but I have never seen a lender try to enforce those kinds of provisions once the developer is forced out and the lender assumes control of the project. Too much bad pubilicity I guess for too little chance of recovering much anyway. By the time they foreclose they generally have written things down sufficiently to just unload it to a bulk buyer (like Vue Orlando) or in some cases they'll simply hire a firm to retail the units on their behalf but at discounts steep enough to ensure that they start generating significant enough sales velocity to get it liquidated in 9-15 months.

[mallguy]

Hopefully this building can work out OK in the long run, maybe by just lowering prices enough to fill it. Having a 50-floor nearly vacant building in Charlotte is unfathomable to me.

Edited June 20, 2011 by mallguy

[sleightofhand]

Hopefully this building can work out OK in the long run, maybe by just lowering prices enough to fill it. Having a 50-floor nearly vacant building in Charlotte is unfathomable to me.

Not only is the developer opposed to lowering prices but also will not consider leasing out units. I have had a number of clients recently ask if we could lease a larger unit from the Vue and had no success. The VP of sales told me last week they get about 15 calls a week asking to lease.

[28202]

No construction lender would allow that.

[Urbanity]

If the developer can ride out the market I tip my hat, but living a block away from the tower that is often dark leaves me with a pessimistic attitude.

[mallguy]

Well, if we have these facts:

(1) Only a small portion of units sold

(2) No leasing

(3) No lowering prices

Then maybe bit by bit it will fill up, but it could take a long time.

I assume that the lender could take possession of it and try to get as much cash as possible out of reselling the property.

Either way, not good, and infuriating, since Fourth Ward is my neighborhood, and the last thing I want is a mostly vacant condo tower overlooking everything.

How about demolition eventually?

Maybe it could become a hotel?

Edited June 21, 2011 by mallguy

[HopHead]

Well, if we have these facts:

(1) Only a small portion of units sold

(2) No leasing

(3) No lowering prices

Then maybe bit by bit it will fill up, but it could take a long time.

I assume that the lender could take possession of it and try to get as much cash as possible out of reselling the property.

Either way, not good, and infuriating, since Fourth Ward is my neighborhood, and the last thing I want is a mostly vacant condo tower overlooking everything.

How about demolition eventually?

Why in your world would you want to demo this building? Aside from the fact it wouldn't happen, that's just ridiculous. Give the Vue a few years. It'll fill up. It doesn't help that banks aren't lending money for these types of buildings, unless you have a large chunk of cash to put down and/or you can convince the appraiser the units are valued at 2006 prices. At some point the developer will have to put them at a price point to sell unless he wants to continue bleeding money if it remains mostly empty.

Edited June 21, 2011 by dbull75

[mallguy]

Why in your world would you want to demo this building?

If units in it don't sell, and if there's thus not enough money to maintain the building, what would happen? It'd decay. Fourth Ward doesn't need that. Maybe a smaller building with architecture that better matches the neighborhood would work on the site.