News 10-31-08 Montage
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Posted by: Buyer - 10/31/2008 12:48:10 PM
These are more than tough times for banks and developers alike. The Montage is Reno's best condominum developement - bar none. If you haven't seen it for yourself, you should.
The quality of construction is outstanding, and the progressive design and detail is something we really need in Reno. Especially now in these hard financial times.
I hear the first wave of new owners are about to take residence there in the weeks ahead; and I think Fernando Leal and L3 Development really deserve our community's support. They've supported us in so many ways (employing hundreds of workers and companies, charity donations, Artown galleries, etc.)... we all need to return their ongoing dedication to our community.
It's what we do in Reno. We work together to make it a better place to live. And what a beautiful project The Montage is for us.
I'm sure Mr. Leal will manage this all in short order - he's Reno's visionary, and we have to stay positive for, and with him.
Posted by: LoftGirl86 - 10/31/2008 1:11:38 PM
I hope you are right, Buyer, because it would stink if something went wrong with this project. It would hurt downtown so much.
Posted by: Buyer 2 - 10/31/2008 1:23:31 PM
The Montage is THE best property downtown. Fernando Leal is to be commended for his effort. The loan deal is a bit of a concern though. From a google search...
"For regulatory financial statement (i.e., book) purposes, unless a loan is both well secured and in the process of collection, federal banking rules generally require that a bank suspend the recognition of income on a loan (and reverse any previously recognized uncollected interest income) if:
* The loan is maintained on a cash basis because of deterioration in the borrower's financial condition;
* Payment, in full, of principal or interest is not expected; or
* Payment of principal or interest has been in default for a period of 90 days or more.
For many banks, the last item listed above (i.e., in default for 90 days or more) will be the typical trigger for putting the loan on non-accrual status for regulatory/book purposes. As such, the bank will stop recording interest income on the loan and will also reverse, from book income, the accrued interest receivable on the loan. Once put on non-accrual status, any subsequent payments received from the borrower will generally be applied to the principal on the loan, unless otherwise provided for in the loan agreement. The bank would then resume recording interest income on the loan when principal payments are current and the non-accrual loan receivable is considered to be fully collectible."
Posted by: living in Reno - 10/31/2008 2:09:34 PM
As a side point, the Montage allegedly sent out 30-day notices to close with a December 1st closing. As the story goes, it wants all the reserved units to close around then. Assuming all the units did close around then, most people would be unable to move in for a long time.
Posted by: renoguy - 10/31/2008 2:11:14 PM
Like it or note, the Montage has a huge loan that is coming due late this year with a possible extension to next year. If the loan is not paid off, will Corus bank renew it or foreclose. That is the $64,000 question.
Posted by: Buyer - 10/31/2008 2:26:52 PM
I'm planning on moving in, and I don't understand why anyone would think this would stop our occupancy. We're looking forward to being some of the first in the building, and will tell our friends to consider leaving their water-sucking lawns and join us.
Posted by: Buyer 2 - 10/31/2008 2:54:02 PM
Just to keep the "rumors" seperated from the facts - They did send out 30 day closing notices, I received mine. Mine had a projected date of close at December 1, 2008. I am interested in hearing what amount the first couple unit apprasials come back at. This could possibly be as big an issue for the Montage team as the Corus loan.
Posted by: Pinky - 10/31/2008 3:16:52 PM
Se7en is not moving to west street market it will be a second location for us.Thanks
Posted by: SierraNative - 10/31/2008 5:01:56 PM
I am a Montage buyer as well, but live in the Bay Area. If you think things are bad in Reno, take a peek down here. If you've ever interacted with Fernando personally then you know he'll do everything in his power to adjust for what's happening in the market. Yes I may take a hit in equity, but I am planning to retire there so in the larger picture, it really doesn't matter. I bet when he says 'best interest of his buyers' which is me, I bet he's trying to work out a deal to lower the prices.
Posted by: manlee - 10/31/2008 7:27:13 PM
Leal is not a visionary for Reno. He is simply an out of town developer who took a gamble. He is now losing as we all are...that being said, he is lying about his banking problems. Any developer knows you must sell the product to pay the loans that come due. Through no fault of Mr. Leals the prices have fallen and the units that he was selling at over 350 dollars per square, are now only worth 140 square. The project is nicer than a casino, but realistically, the materials utilized are very inexpensive home depot quality stuff.
Mr. Leal needs to stop playing the visionary and get real with his bank and his buyers.
Posted by: LoftyinReno - 10/31/2008 9:07:27 PM
After just meeting with staff,seeing my unit,touring the facility with Melissa, and meeting with Fernando I have the utmost confidence in this project.I take him at his word that this is a solvent project and we plan to proceed with our purchase.That may be a strange concept this day and age, but that's how strongly we believe in the downtown district.
We met with the Aces for our season tickets and are looking forward to the basketball season kicking off.
All you have to do is pick up the paper or look at the TV to see that what is happening here is in play at every development currently in progress.Banks have to continually reassess loans.Sales have to be competitively priced to this new market. I agree with Sierra Native which is we have a different market now than when these originally went for sale, and it wouldn't surprise me at all to see L3 working with the bank to make the prices even more appealing now that the project is coming to completion.
Posted by: Bugsy - 11/1/2008 12:34:35 AM
Posted by: Jeffy - 11/1/2008 9:17:31 AM
Manlee, anyone who looks at an aging casino and its surrounding neighborhood the way L3 Development did and saw the potential the neighborhood can become is a visionary. Home-depot quality construction and parts? Hardly. That's a laughable comment. I have toured my own unit several times. He installed my refrigerator, then ripped it out because it stuck out an inch past the counter next to it, and put in a new one that fit. No extra cost to me. I would have lived with the old refrigerator. That's not someone who uses Home-depot quality parts. He decided to use blasted powder coated resin to paint my balcony, instead of standard gray paint. It has a lifespan three times that of regular paint. That's not home-depot quality. Get a life.
Posted by: Buyer - 11/1/2008 9:45:48 AM
If Fernando Leal isn't a visionary in Reno - then who is? Why assume he's lying? If you knew anything about him personally and professionally - you'd know he does not lie to himself or the public.
Have you actually experienced the quality of materials in the development in detail? It's certainly NOT "Home Depot" quality - and that's a fact. The materials used are well beyond what is required by code.
The point is...the project isn't "nicer than a casino"...it ISN'T another second-rate casino - and that's an important change in our community's vision.
Gaming is localizing across the nation. Reno's gaming has always been a second-rate model to Las Vegas. It's time we set a new standard for our town, and change the way we're perceived. (Thank "Reno 911" for making that worse!)
L3 Development took the shell of an outdated business model, and turned it into a community of progressive, new, livable space. That's a major visionary step in the right direction.
Supporting a new vision for an non-gaming based Reno is in everyone's best interest now - more than ever before. Leal is doing that for a fact, and we should support those who do.
Posted by: Rick - 11/1/2008 10:38:13 AM
I do not understand why anyone would attack Mr. Leal. He is a visionary that has embraced downtown Reno at personal risk. The notion that he is just an out-of-towner hearkens to the closed-minded CAVE(Citizens Against Virtually Everything) subculture that seems to populate Reno. We have no room in our city for negative anti-productive rants against people that are trying to create real positive change. Instead of squandering energy on criticizing Leal I recommend taking some positive action to help improve downtown. Just like Mr. Leal is doing.
Posted by: DowntownMakeoverDude - 11/1/2008 10:53:16 AM
The Montage is the largest adaptive-reuse project in America. That's pretty visionary. There's nothing else like it on the market.
Aside from the Montage staff, I've spent more time in the building than any of you, including the buyers. I photographed its interior and exterior progress extensively...definitely not Home Depot quality, Including the pure copper fountains on the decks, the gas driven bbqs, the uber-heavy glass used on the building, etc. etc. etc.
Fernando is one of the most dead-honest guys I know.
Posted by: Slapdad - 11/1/2008 4:21:25 PM
Either the bank mis-spoke or there is more going on here. A non-accrual loan is not just a loan that is coming up for renewal....it is a loan that either doesn't have sufficient collateral, or the interest being paid is below the interest on the fact of the note. A buyer could probably be current with payments, but if the interest being paid isn't what the agreement calls for, then the loan becomes a non-accrual...in other words, it becomes a cash-basis note and the interest that the bank recognizes as income can't be booked until it is received....thus the term non-accrual.
With the banks under so much scrutiny these days, I have a hard time believing that this was stated incorrectly, but anything is possible. I hope the Montage fills up and pays extends the agreement.
Posted by: Tom - 11/2/2008 12:59:44 AM
I'm not sure anyone is attacking Fernando here, rather the truth of the Montage's financial situation is what is under question.
There appear to be two "truths" in conflict here:
- Downtown Mike, the proprietor of this site, says that Mr. Leal and his project are not in trouble. He has posted that Fernando has assured him that "the fact is we are and always have been current with our loan. We have zero financing issues as it relates to completing the project."
- Also true that in Corus Bank's quarterly report filed in June of 2008 placed the Montage loan in essentially the non performing category. Generally this means that current and future revenue recongition from the debt service on this loan is no longer expected. This does not mean the loan has defaulted, it merely means that trouble is coming.
Trouble certainly is coming - these condos, "reserved" (not sold) two years ago are certainly not going to be valued now what they were valued then. How the developer and the bank deal with this problem is what will define them both in the eyes of the community for years to come.
Posted by: Buyers dilemma - 11/6/2008 11:28:28 AM
My wife and I have reserved a unit at the Montage. To date we have invested 50k to reserve this unit. Now the time has come to finalize the deal and we are very hisitant. We understand that our deposit is non-refundable, even though completion date didn't happen as advertised. That is a different issue. The dilemma is whether we should just accept a 50k loss and walk away or finalize the deal and potentially loose more money. Staff has indicated, well at least as of a couple of months ago, that they have no plans of discounting the units, even though I very much doubt whether they will appraise for face value. I give staff credit for indicating that if they lowered prices they would be lowered to everyone so no one assumed negative equity. However as the pressures build to sell units I have trouble believing they will be able to stick to that plan. Considering the amount of units, if you start with negative equity there is a good chance that you will be saddled with a property that will be virtually impossible to sell down the line. So, do we accept the 50k loss or do we chance loosing even more. That is the dilemma facing many buyers at the Montage. I'm hoping that Fernando will understand this problem and react accordingly. The 50k he will receive isn't enough to keep the creditors off his back, he needs to sell units.
Posted by: Floor8 - 11/6/2008 1:51:53 PM
I work in this industry, I am a Montage buyer as well, and it does not take a genious to put the pieces together. Corruis Bank, just like any other bank that financed any residential condo project in the past three years, wants the building occupied to make the project less of a risk and to get money flowing in. The only way they can continue to sell units in our building, in this market is to lower the prices drastically. Common sense right? Nothing expensive is selling anywhere...period. But they don't want to lose us or have us walk on our contracts either, so my intelligent guess is that Fernando Leal's negotiating with the bank is not about lowering prices (they won't give him a choice on that), it's about us, and how much of a cut the bank is willing to take to appease us and soften the blow we'll be taking buying these. I have lived in condo towers my entire life. If Fernando Leal is smart, he knows a building full of fuming mad condo owners is not a good thing. That, my fellow building mates, is what he is in all probability, negotiating. It JUST happened with a new condo tower in Miami my parents are moving into.
Posted by: Buyer 2 - 12/10/2008 12:38:04 AM
Over the last couple days I keep hearing that Corus Bank is stepping in and taking over this project on Dec. 15th. Has anyone heard the same or can shed some light on this?