Credit crisis comes to Olympic Village
Gah just posted this link, looks like Millennium Water might need a bail out:
As the credit crisis south of the border begins to creep north, concerns are mounting over the impact it may already be having on construction of the athletes’ village for the 2010 Winter Games.
Last week, members of Vancouver’s city council held an emergency, in-camera meeting to get an update on the project. Much of the discussion revolved around the city’s obligation in the event the developer, Millennium Development Corp., can’t meet demands from the bank because of massive cost overruns, according to sources briefed on the meeting.
The best part? Even if you haven’t been speculating on Vancouver condos, now you get a chance to take part in the collapse since it looks like the City is on the hook for cost over-runs on this particular project. But don’t fret, the absolutely ‘worst case scenario’ at this point looks like a $100 million dollar bill for Vancouver tax payers.
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October 6th, 2008 at 1:19 pm
October 6th, 2008 at 1:20 pm
Our economy will head in the same direction as the U.S. economy and at this moment, Uncle Sam is headed downwards.
Specuvestors, you will all be in deep red ink and looking at a foreclosure sign soon unless you cut price agressively and sell before it’s too late.
October 6th, 2008 at 1:23 pm
http://vancouvercondo.info/images/backingaway.gif
October 6th, 2008 at 1:24 pm
…NOT.
Noname
October 6th, 2008 at 1:26 pm
October 6th, 2008 at 1:29 pm
October 6th, 2008 at 2:30 pm
Yes, the developer had planned to sell some of the better located units at or above $1000 per ft2. The land cost was the highest paid in Canada to date per ft2 of development space so $250 to $300 seems low to me.
October 6th, 2008 at 2:48 pm
Do I make my check out to Bob Rennie?
October 6th, 2008 at 2:50 pm
This is exactly why local government should NOT be giving support or backing to projects like this. Who cares if you overpaid for the land as long as its taxpayers left holding the bag when your optimistic forecasts fall through?
October 6th, 2008 at 3:10 pm
better yet:
“My backside hurts from the bid”
October 6th, 2008 at 3:22 pm
October 6th, 2008 at 4:00 pm
Easy, just raise property taxes! Helps pop the bubble and nails the perpetrators of the bubble to the wall. Win/win scenario!
October 6th, 2008 at 4:14 pm
October 6th, 2008 at 4:15 pm
you wish. likely they’re walking away with lots of $$$. it’s the buyers who are going to take it up the @$$.
October 6th, 2008 at 4:15 pm
October 6th, 2008 at 4:30 pm
And how much of that 60% will back out before completion?
Noname
October 6th, 2008 at 5:37 pm
His superpowers include:
-Change old counter tops into granite upon touch
-Convert older condos into “executive” condos just by walking inside them
-His cape give him invisibility to bear-ish reporters
-Convert any 25 yr mortgage to a 40 yr one
October 6th, 2008 at 5:40 pm
October 6th, 2008 at 6:30 pm
October 6th, 2008 at 6:35 pm
Does “worst case” include a RE bust as well as overruns?
October 6th, 2008 at 6:44 pm
Oh property tax increases are negative for RE prices of course. Just ask Montreal.
October 6th, 2008 at 6:49 pm
October 6th, 2008 at 7:00 pm
I think 60% should look in the mirror. The point about higher property taxes being negative for property prices is a good one but realistically other city services will suffer in the wake of this bad investment and everybody suffers.
I’m not sure how much the city will have to cover but it seems suspicious the developer is turning over its loans at the exact time credit is hard to come by. I don’t know the property development business well enough to comment whether this is normal practice.
October 6th, 2008 at 7:00 pm
So the current situation is
A) Millennium takes there business elsewhere and tries to find a new creditor. Hard to do in the current marketplace, but apparently some Canadian financials are interested.
B) Millenium obtains a co-signer to guarantee the investment, ie the COV or the BC Government or another high profile development company.
The project stating it’s 60% is including that fact that none of the final phase has even starting selling yet. Fortress out of NY is worried that they won’t be able to sell hence their reservations of providing the credit needed to finish the development. Millenium isn’t worried about being able to turn a profit on the project, even if they were to lower the prices for the more desirable phase 3 they would still turn a profit. The only reason the COV is even involved at this stage is they provided a guarantee to the IOC on Olympic housing.
Here’s a tip expect a Canadian pension fund to pick up the financing at a slight discount as Fortress unloads the loan. The project will continue ahead as is.
October 6th, 2008 at 7:03 pm
I agree that Vancouverites voted in favour of the Olympics, but we didn’t vote in favour of providing a backstop to hedgefunds and developers so they could profit.
October 6th, 2008 at 7:13 pm
October 6th, 2008 at 7:14 pm
October 6th, 2008 at 7:17 pm
http://www.tradingmarkets.com/.....s/1919496/
Oct 3 (Reuters) - Citigroup recommended that investors sell shares of E*Trade Financial Corp and Fortress Investment Group LLC, saying the companies may have huge portfolio losses and capital constraints as the credit crisis continues.
Analyst Prashant Bhatia said in a note to clients that he expects Fortress to run out of cash in the first quarter of 2009 and sees losses of $3.4 billion in E*Trade’s mortgage portfolio.
October 6th, 2008 at 7:17 pm
http://tinyurl.com/ys7eu2
All planned, taxpayer (ignorant and malleable as they are in aggregate) wrapped up and delivered. Media co-opted to held the show along. What chance does the public have when confronted by a co-ordinated attack like this?
October 6th, 2008 at 7:19 pm
October 6th, 2008 at 7:36 pm
http://cuer.sauder.ubc.ca/cma/.....algary.pdf
Nor did the city or province undertake the level of infrastructure spending that we are seeing in Vancouver. An exception being the Saddledome which was needed for the Flames anyway.
SLC almost turned out to be a financial fiasco which had to be averted by Mitt Romney. And LA will be forever known as the McLympics - even the locals tried to ignore it.
October 6th, 2008 at 7:43 pm
I am glad that we (the public) are always last to know the real situation so that these overpaid,underproductive, pompous, greedy, above the law, supposed intellectuals can bilk us out of our hard earned money leaving us scratching our heads wondering WTF happened.
October 6th, 2008 at 7:59 pm
October 6th, 2008 at 8:24 pm
In any event, the fact that Vancouver voted for the Olympics does relieve city council from their fiduciary responsibility to voters to note give a sweet deal to a New York hedge fund.
October 6th, 2008 at 8:57 pm
The only way one can consider the Olympics to be break-even or better is by not counting most of the stuff that costs money.
The retards who voted for the 2010 games should get the bill for this. Not me.
October 6th, 2008 at 9:12 pm
October 6th, 2008 at 9:17 pm
That was my point. As an economic stimulus the Olympics are at best useless, and at worst mire a city in long-term debt.
Anyone who thinks that the Olympics are in any way going to offset BC’s long-term problems with the forest industry and tourism (reduced US consumer spending) is nuts.
In any event, the fact that Vancouver voted for the Olympics does relieve city council from their fiduciary responsibility to voters to note give a sweet deal to a New York hedge fund.
That deal was made by the NPA-controlled council which was elected in 2005. Once again, you get what you vote for.
http://www.city.vancouver.bc.c.....eloper.htm
October 6th, 2008 at 10:01 pm
October 6th, 2008 at 11:19 pm
October 6th, 2008 at 11:53 pm
Millenium Group really needs better forecasters.
$193 million bid blows away competition:
http://tinyurl.com/3j59z3
My question is does that mean pre-sale purchasers are buying a lived-in condo?
I’d hate to be the guy purchasing the unit used by the US Men’s hockey team.
October 6th, 2008 at 11:55 pm
October 7th, 2008 at 12:03 am
Will the “experts” ever learn?
October 7th, 2008 at 12:12 am
October 7th, 2008 at 7:29 am
How about Olympic Overrun Property Surcharge; or OOPS.
October 7th, 2008 at 7:51 am
How do you make impending financial doom funny?
October 7th, 2008 at 8:24 am
1) The olympics will be a huge success. This is the best place on earth afterall.
2) Vancouver condos are still a solid investment. The stock market is down over 30% on the year. Most bears have been wiped out. Bulls remain rich and will still rent to the bears if they’re nice.
3) I’m backing the bid
October 7th, 2008 at 8:42 am
http://tinyurl.com/4×42zt
October 7th, 2008 at 8:43 am
This phenomenon is growing here in BC…but the problem is an instantaneous glut in the supply demand ratio can result . if one figures how mnay condo units each hi rise contains. Bob Rennie’s bio has him being one of the 1st to foresee this “condo’s are the future” but this will be a pattern for the future of boom- bust and equally greedy Local Gov’ts pimping building permits and all the revenues that result.
Once the economy tanks. the dominos fall and any hi rise project can go broke overnite
October 7th, 2008 at 9:00 am
October 7th, 2008 at 9:23 am
From later in the same article:
“…the U.S. economy is expected to start coming out of recession next Spring.”
LOL. Yah, right. If that’s what they’re predicating our ‘escape from recession’ on, then we’re toast.
October 7th, 2008 at 9:49 am
Vanoc also said in its statement that is “confident in the city’s fiscal management” of the Olympic project. It long ago transferred all of its risk in the project to city taxpayers by giving Vancouver $30 million in venue financing it received from the provincial and federal governments.
So they’ve transferred ALL risk to city taxpayers?!? I guess Vanoc does know what they’re doing, to bad the government doesn’t seem to.
October 7th, 2008 at 9:52 am
October 7th, 2008 at 10:16 am
So they’ve transferred ALL risk to city taxpayers?!? I guess Vanoc does know what they’re doing, to bad the government doesn’t seem to.
Yeah, I flashed on that statement, too. Seems they took the money from the Province and the Feds, handed it to the city and washed their hands and walked away. $30M is just a drop in the bucket. Sweet deal for them.
October 7th, 2008 at 10:24 am
October 7th, 2008 at 10:37 am
hate to tell you this but there is no upside, at around $1000 per sq. ft. this development will be underwater for the rest of this century …
October 7th, 2008 at 11:07 am
Tumbling stock markets, tightening credit lines and slumping investor confidence could erode many of the gains that Olympic organizers are hoping will flow from the 2010 Games, economists warn
Gee I think I’ve heard that kind of talk before… who was it… oh yeah…
From the people who opposed the Olympics from the start.
October 7th, 2008 at 12:11 pm
Millennium totally screwed up the phased launches and presales. Millennium is toast, and the taxpayers will definitely be on the hook for this one.
I know lenders in on this deal; they’re not worried because they will all get paid back by the City worst case. As a taxpayer, it makes me sick.
October 7th, 2008 at 12:19 pm
That is an outright lie. The City has signed a completion guaranty and is on the hook to finish the project no matter what happens, end of story. Worst case, they will kick out Millennium and get a blue-chip developer like Concert or Concord to come in and finish things. Should have taken one of the established developers in the first place, they could much more easily absorb the cost overruns and also may have sold the project better.
October 7th, 2008 at 12:20 pm
I’d hate to be the guy purchasing the unit used by the US Men’s hockey team.”
Yep, exactly.
October 7th, 2008 at 12:31 pm
Ah yes, reality bites. This Olympic Village was fishy from the start….the price paid was exhorbitant. I hope the whole thing crashes and burns, the whole Olympic endeavour disgusts me. My view is that the financing will dry up due to the global credit crunch …and the suckers that bought into these $1000 sq/ft pigeon holes will bail….the locale ain’t that great, so the price paid was already way over the top. However, how will Vancouver lose…didn’t they make a pile selling the land? PS Good comments by others, my compliments.”
FYI, the financing is already arranged for Olympic Village, that won’t go anywhere. The cost overruns will either by covered by the developer, or the City will take over and fund it themselves.
However, I’m also curious about how many buyers will bail when their condo is underwater, not to mention the several hundred units that haven’t even been launched yet!
Regarding the City getting money on the land, you’re going to love this fact of information…. the land purchase is included in the project costs, so the City only gets paid for the land from the sale of the condos. So if they don’t sell all the condos, the City doesn’t get paid!