News 12-13-08 Breaking Montage News
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Posted by: Downtown D - 12/13/2008 2:38:55 PM
This doesn't seem like good news. Sorry. But it really hints at more problems to come. As stated earlier, there may be real problems with anyone but cash buyers, since others will not be able to get loans for a building that has less than 50% of units sold. Can you imagine how that will bog things down and cause further delays?
Posted by: stjoe56 - 12/13/2008 3:20:32 PM
The odds of me closing on my unit at the Montage has dropped to a little bit better than "it will be cold day in hell before I close."
Posted by: Downtown D - 12/13/2008 4:20:59 PM
I appreciate your website and your love for downtown Reno and the great neighborhoods of Old SW and Old SE. I think that Mr. Leal is the one doing the spinning; he's spinning you and all the rest of us. He seems to have gotten himself out of a financial disaster while insinuating that buyers are stuck with their contracts except for the changes (prices) that Corus Bank is making out of the kindness of their hearts.
Posted by: Raymond - 12/13/2008 4:26:55 PM
Your enthusiasm for downtown is commenable. But come on, you have become to close to Mr. Leal and cannot see objectively. The Montage has failed. It's going back to the bank. Who knows what the bank, which is in precarious position anyway, will do. The letter from Mr. Leal, no doubt drafted by his counsel and pr person, is a nice glossy coatover of a bad situation. I cannot imagine anyone who would go forward and buy there now. Six months from today, the place may well be the biggest apartment complex in Reno. Really want to buy in a building that may become effectively the biggest dormitory at UNR?
Posted by: Montage Buyer - 12/13/2008 4:31:00 PM
Well, it will really come down to the details for us. My wife and I still believe in the long term growth, maturity, and vision taking place downtown right now. If the price reduction is right and there is some kind of attractive financing available, we will probably proceed. We have always looked at our purchase as being long-term, renting it for 5 years and then either moving to Reno or using it as a second home. We were one of the first under contract so there was a price runup (and drop) since we signed on.
For those who are under contract for several units and were planning to flip them - different story and decision making process.
Can't imagine that Corus will be as helpful and understanding as Fernando and his team have been. We'll see...
Posted by: Matt Orchowski - 12/13/2008 5:25:18 PM
WOW this is not good news, thanks downtown makeover dude for trying to get an interview, we all apprechiate your efforts. It sounds to me like the Montage is a failure, at least for now, and the Fitz? I have a REAL bad feeling about it, and I'm not at all to say the least pessismistic. I hope for the best and Montage buyers, make sure you get what you paid for or demand your money back.
Posted by: Montage Buyer - 12/13/2008 5:36:35 PM
Wow, a little blood on the water and the feeding frenzy begins. Letís all take a breath and dial down the flameÖ
AS I mentiond, I am under contract at the Montage also. I havenít received my letter yet as I live out of town but Fernando called me Friday and told me the gist of it. I also had a chance to read it on the Dudeís blog. Not the outcome any of us - buyers or not - really wanted, nor did Fernando. My wife and I signed up early as we were sold on not only Fernandoís vision but everything else that was going on downtown and in beautiful Northern Nevada. We werenít buying on pure speculation, but rather wanted in early - planning on renting it out for a few years - and then moving there or using it as a second home.
But, life happens. We saw the prices skyrocket after we signed our contract, I ended up leaving my job and starting my own business, Credit crisis and economic downturn later - here we are.
Downtown Dude may be passionate about the project (as he is for most quality improvement projects downtown) but Fernando was even more so. For all of you that havenít taken a tour or seen what Fernando and his team built, you are missing out. The project is EVERYTHING that Fernando had promised us 3 years ago and more. The development and revitalization of the downtown corridor is fantastic - and itís far from finished. This situation is a setback - a huge one - right now but in 5 years this could be perceived as the catalyst needed to finalize the drive downtown to finish the job.
So, will we go through with our purchase? I donít know yet. We need to see the price reductions, look at the financing options and run the numbers. The contract is tight and there is an option in there to walk away - but you lose any money deposited and held in escrow. Not a great option but, for some, maybe better than the alternative.
Those of you living in Reno, you should be aware of this project and itís overall impact - today and for the future. This is THE class property downtown right now, no question. Those of you flaming on this (and other blogs) that donít live in Reno or havenít taken the time to really find out all the great things happening in Reno right now need to get informed.
Thanks for the blog and opportunity to converse. Downtown Dude, keep up your passion for Downtown and communicating all the great - and not so great - things happening. Fernando, thanks for trying to do this right. The quality, your integrity (all subs and vendors have been paid promptly, communication with contract holders is great), and your passion for your projects is what Reno needs so much more of.
Peace out everyone.
Posted by: Justin - 12/13/2008 5:42:53 PM
I'm sad about the Montage, but not suprised. The prices were enough to make this a failure regardless of the current economic/housing conditions. $500k for a decent sized condo in downtown Reno is CRAZY. I feel bad for those who put deposits down on a unit. I have no choice but to believe this entire project will be turned into rentals.
Posted by: Danita - 12/13/2008 6:10:14 PM
So this means Fitzgeralds is not going to be remodelled either. That is just lovely. Another closed down casino to never re-open.
Posted by: Lofty in Reno - 12/13/2008 9:17:08 PM
Ouch- this hurts. It doubly hurts based off what was written here on Friday. The 'vow of silence until the good news is communicated' now seems like we were all taken, although for what remains to be seen. If I were to guess this has been going on for a long time and this is a crummy way for us as buyer to be informed. On the other hand maybe I'm just hurt nobody has called me letting me know my deposit is now with Corus Bank. Lots of forked tongue wrapped in good ole' boy spin from where I stand.Don't bother asking my questions at the interview. They are no longer relevant.Anyone need 2 season tickets to the Aces?
Posted by: MontageBuyer - 12/13/2008 9:56:43 PM
If I had to take a gander loftyinreno, I would say that downtown dude didnt quite know the full extent of what was released today. Just like us, he only knows what Mr. Leal tells him. Looking at this and other webs, he has taken a lot of heat for calling it good news. I have been reading this web page for 2 years and have a feeling this was explained to him much differently before today. Spin is spin, it can be easy to fall for, especially with as passionate as he is about downtown Reno. What I want to know is who is doing the spinning, Mr. Leal or Corus Bank? Was an email really appropriate? A phone call would have been nice, I agree.
Posted by: Lofty in Reno - 12/13/2008 10:10:03 PM
Montage Buyer I didn't mean to insinuate that it was a conspiracy, more that we've all really bought into Leal's vision,(especially me) and by that I mean his honesty, and you can't tell me based off what he said even as recently as Thursday that in the last 48 hours it has been lived up to that standard. Or do I need to quote script and verse of what has been written here? Look, I believe in downtown. I think criticizing someone who tried this undertaking is for people who have never risked anything, or who like to see others with more than they have brought down at every chance. But there still is the issue of lack of communication here. I hope if I do end up buyer you will too, as this has been the best support group during this whole haphazard process.
Posted by: DowntownMakeoverDude - 12/13/2008 10:20:14 PM
I feel pretty down tonight, so if anyone wants to take shots at me for my intial post on Friday, go for it, because I am already pretty numb. I was told it was good news from Fernando, I didn't know all of the details (that's why I was going to interview him but that got cancelled). I would never deliberately mislead people on my site, that would go against the entire reason I put up this site in the first place.
Posted by: LoftyinReno - 12/13/2008 10:36:05 PM
Perk up buckaroo. Based off everything that's happened I can't believe anyone thinks your on the payroll (not even Tom :))Stay the course and keep up the good work.When this blows over I'll still want to know what's happening downtown.
Posted by: MattO - 12/13/2008 10:39:06 PM
DMD, don't fret. It's not your fault. I think you do a VERY good job in delevering the facts, honest and wholehearted. Fernando cancelled on you, you didn't do anything wrong. Just move on and accept that it's a VERY bad economy now hence the reason all of this is taking place, if the economy was better, NO problems would be happening and things would get built and financed lickaty split, it's a tough spell we're gonna have to wait out for the next couple of years I'm afraid.
Posted by: DowntownMakeoverDude - 12/13/2008 10:40:06 PM
I also want to say though, that Fernando Leal has never given me a reason not to trust him. He has always been straight with me, and over time he's trusted me with a lot of information he'd never dream of telling traditional media. He's built the building he committed to build. Down to a 't'.
So if Corus ends up doing this and really lowers prices for both buyers and prospective buyers, then maybe in the long term thats a good thing for downtown Reno. I believe Reno Ignoramous on Reno Realty Blog; people will live downtown, just not for 500 a s.f.
So the big question is now that Corus has control, how can they gain the trust of current buyers and prospective buyers and not cause a catastrophe by having them all walk?
Posted by: Another Buyer - 12/13/2008 10:53:48 PM
DTMD -See, that took all of 20 minutes to get you back in the saddle.I new you had more mettle than you let on.
Posted by: MattO - 12/13/2008 11:09:48 PM
I do want to know what's going to happen to the Fitz, I DONT want to see that thing sit there dark any longer than I have to.
Posted by: elysium - 12/13/2008 11:37:38 PM
you armchair critics have no concept of the creativity, vision, hard work and flat out balls it takes to do what Fernando has done. To accuse him (or DTMDude, for that matter) of evasion or glossing things over is a gross injustice, and suggesting that he has wiggled himself out of "financial disaster" demonstrates a total lack of understanding of the gutwrenching situation he is in. If anyone deserves to succeed, he does, and everyone in Reno owes him a debt for his dedication to the city. He is evidently trying to make the very best for everyone concerned from a bad situation, and as previously pointed out, has kept current on his obligations. The global financial crisis is bringing down not only certain Wall Streeters who richly deserve their fate, but also hardworking men and women who have provided jobs and inspiration to others.
Posted by: Wiley_n_Reno - 12/14/2008 7:42:41 AM
I agree with elysium. It takes a gamblers guts to extend yourself and build something as cool as the Montage and Mr. Leal should be commended. It's a GLOBAL FINANCIAL CRISIS folks! And "global" means EVERYWHERE! Things go up and things go down, but the momentum for downtown Reno is going forward. We shall ride it out. Have some of the miserable haters from the RGJ.com comments sections come on here?
Posted by: Larry - 12/14/2008 8:22:40 AM
So let me understand this... L3 Development is working with Corus through a transition of the property back to the bank. The bank has agreed to lower prices, and may even consider financing options for some buyers if needed. They're adjusting prices DOWN to reflect pricing in today's market for buyers who purchased over two years ago.
And all you people can say is that Fernando Leal is "pulling the wool over our eyes", including the author of this blog?
What the hell would make you people happy then? To see it fiscally fail and remain dark on that corner of downtown? Would that make you happy and feel as though you have "the truth"?
I see this as tremendously good news in a terribly bad market. They're working it out - for everyone's benefit (except L3 Development's). Consider what has gone into this project - and what has been at stake.
Then consider the actions they're taking today to try and make it work for everyone involved.
Then ask yourself is this is truly bad news. It certainly is better than what it COULD be today.
As for your interview - there ARE legalities that arise in this type of transaction we can't understand. I have hope that there will be more public discussion when the legal timeframes have passed that affect these transactions. Perhaps that's the real reason your interview was delayed, and this statement issued in it's place. There are larger concerns that we, the public, really don't (and can't) know about unless we're part of the physical transactions. Maybe it would be best to remain positive and try to understand we don't control, or are required to have, information on every private financial transaction in our good city.
Posted by: TOW (Tired of Waiting) - 12/14/2008 9:37:08 AM
I'm skeptical about three recent comments. They seem to be written by Montage people. No one is all good or all bad (Fernando, DMD, the buyers). I don't think Fernando is above being criticized.
Really there are many people who wanted to make Montage there home. Now they are being told they are locked into a failing project or face financial ruin by walking away from deposits. In these times some people will need their money back. Fernando is heartless about this. He gets to walk away from financial responsibility from the Montage without a blemish on his record. There is an injustice here.
I know that Corus bank is trying to figure out how to make this building financially viable, but the challenges are great. Buyers are facing living in a poorly run, poorly kept building. Who will pay the HOA dues on unsold units if Corus bank fails? How long will people be living in a building less than 50% sold?
Posted by: Another Buyer - 12/14/2008 9:53:44 AM
Larry, your obviously not a buyer or you too would be wondering why we have to get this information here rather than hear it from the Montage directly. As to legal reasons why there wasn't an interview - then don't say your going to give one!
Lastly you're darn right I feel I should be privy to the financial situation- I have a $50K deposit there. Now what if Corus decides to rent out the condos? hmmm?
Posted by: cbielser - 12/14/2008 2:42:58 PM
Basically, they foreclosed on him. End of story! This presents lots of
issues for buyers. p.s. plez take the ugly, unsafe chain link fence down ASAP.
Posted by: Steve Watts - 12/14/2008 3:13:37 PM
Larry, you are giving credit where it is simply not due. Read the statement again...it is purposely vague for a reason. There is no specific statement from any bank official, no numbers to back up that any of what is said there is going to be done. So the bank "told" Fernando it would lower the price to those who bought in? Not legally binding, so let's judge based on what is DONE, not what is said to someone second-hand. If it happens (doubtful), great, and they'll get all the applause I can give.
DMD, I love downtown and love the site, but this is a repeat of GSR. Developers hype a project to the media to get condos sold, which will pay for their own lack of money. TV stations, and yes, this site, reported that GSR "will" become this and soon will do "that." No, it's "GSR SAYS they will become this, and SAYS they will do that." Otherwise, we'll just get fooled again and again from undercapitalized developers who are looking at hype to make some money.
Posted by: Larry - 12/14/2008 4:15:35 PM
TOW... anyone facing "financial ruin by walking away from deposit(s)" in this deal should have never been in the market to buy a unit to begin with. Yes, losing a 10% deposit on a unit would hurt financially (badly for me!) - but it shouldn't constitute "financial ruin" for any potential buyer. If it does...they were just dumb and not qualified to purchase and own the unit to begin with.
There is no "injustice" here in my view other than an unfortunate reality of today's real estate market - and the Montage's unpredictable timing to have been developed right at the start of the worst portion of this current financial downturn.
Yet today - it's ready for owners, and hopefully at a mutually acceptable reduced price (who knows how low). I think that's pretty good news that people can and will live in downtown Reno there - it's a good beginning to even more of a populated urban core.
Why suppose the buyers will live in "poorly run, poorly kept building"? The Montage shows that not been the case in the past - so why would it predict the future? Why couldn't it be run well, by a good staff that needs the jobs and provides great services? Why can't we see how this could help the West Street Market shops, and all our local restaurants?
More people moving in downtown is an amazing development especially these days - oddly cause for celebration in really bleak times. Just my positive viewpoint, of course....not everyone's.
It's all this negativity that I'm offended by - not the viewpoints that are represented by them, or anything on Montage's development side. I just think it looks like they're trying to work it out - which is more than I could say for very many other developers or banks these days. Give them credit for all trying to do the right thing for buyers until they prove otherwise.
At least Leal is coming forward with some information - maybe as much as allowed - who knows now but them. He's not above reproach, but we don't need to hang him before the jury is in, either.
Will Corus rent units? I actually don't know...but why would they and risk the long term market-ability of the property to owners and protect their long term investment? Renting is hard on property, and where will renters come these days? Wouldn't their goal be to sell to real owners if they could rather than rent?
Why not hope that's their plan instead of expecting the worst from them? Give them time to handle this transition with the buyers? I just don't get the negativity...perhaps I'm naieve, but I choose to be that way then. I still think this is potentially overall good news for Reno - not necessarily bad at all.
Posted by: Bugsy - 12/14/2008 4:51:24 PM
Makeover Dude, Its not your fault. I cant believe after all the good p.r. you gave fernando and the free publitcity you gave him, he turns around and throws you right under the bus when you want to interview him during some bad economic times. Lets remember that these times are effecting all of us and we still choose to talk about this. But fernando seems to think since he has more money, he tends to hide. I lost respect for you fernando. You took these buyers money. Its your job to explain more rather than that pethedic letter your secretary wrote. Do us a favor fernando, when the next train that goes under your trench cover comes, jump on it and never come back. Us true reno visionaries will handle it from here somehow. I apoligize to you makeover dude, I know fernando is your friend, but I dont like his business tatics when times are tough.
Posted by: DowntownMakeoverDude - 12/14/2008 5:04:52 PM
Hi Bugsy, and everyone else, thanks for the kind words. I don't think Fernando pulled out the rug from under me, I think someone on his end or Corus' end decided it wasn't a good idea for any of them to talk to the public until some kind of deal is finalized...that's just a guess of course.
This definitely is not a repeat of GSR, the two projects are so different you can't even compare them. If Corus does what it says it will do in the letter, then I think in the end it will be a plus for downtown. If they don't then they screw over Fernando, screw over the buyers, and screw over Reno. I do know that this is all happening very fast, and it won't be long before we know the full extent. I'm sure the buyers will pop online and let us know what's up.
Posted by: Wiley_n_Reno - 12/14/2008 6:30:22 PM
Posted by: TOW - 12/14/2008 7:13:45 PM
Larry, I agree that people employed to take care of the Montage would do a great job. I'm worried about money drying up to hire people to take care of it. What if Corus bank fails? What if sales don't pick up for years and 30 to 50% of the units remain empty? Look into the condition of other building going through similar difficulties.
It is good that you are not facing financial ruin (even if you lost $50,000). But others might. Many buyers wanted to make Montage their home and thought they would be living there by Fall 2007. Because of changes in the economy, people's circumstances have changed and some will face great financial losses, and Fernando DOES NOT CARE! If they really believed in the Montage, why not release buyers from their contracts?
Posted by: LoftyinReno - 12/14/2008 11:17:20 PM
Gee to Larry- you never really come out and say if you're a buyer- yet you write like you know how this feels. Cards up - do you work for Fernando? Or are you a buyer? There's a lot of spin going on here - either many are just so liberal they'll forgive anything or a lot of these responses are from people close to the project. Imagine it being $50K of your money....
Posted by: DowntownRenoFan - 12/15/2008 2:42:04 AM
I do not share the opinion that the leasing of unsold units at Palladio, Belvedere, and the Montage would be bad for buyers or these projects. Getting bodies and activity in all of these quality, unused spaces by people who actually live and work in this community (rather than 2nd or 3rd home owners) would bring vitality to downtown and eliminate the stigma of vacancy.
Posted by: stjoe56 - 12/15/2008 10:42:38 AM
I do not share the opinion that the leasing of unsold units at Palladio, Belvedere, and the Montage would be bad for buyers or these projects.
What planet did you grow up on! People who lease do NOT have an investment in the building. As far as the landlord is concerned, so long as they can make the lease payments, they are fine.
Buyers on high end projects are a self-selecting group. People who buy have an INVESTMENT in the building. They will have a higher level of concern about the building than any tenant. It is the nature of the beast.
Posted by: Moroni - 12/15/2008 11:20:45 AM
I agree with DowntownRenoFan.
Most of the units were going to be leased out anyway by out of state owners so why not open up unsold units to renting?
Fill the rest of the units up with QUALIFIED renters. Could you imagine the impact on downtown with hundreds of gainfully employed people shopping and eating at downtown establishments every day?
Posted by: EYESWIDEOPEN - 12/15/2008 12:04:09 PM
How about the Village At Idlewild Park? Anyone been by there lately? The place filled up when they decided to lease out half the complex. Now it's become a vibrant and fun place to live. I am SO GLAD that I passed on the downtown towers.
Posted by: ModGirl - 12/15/2008 12:10:52 PM
I like to remain optimistic when it comes to things like this. I like to look on the bright side. 3 years ago the Montage was an old run down casino. Look at the major improvement it has made. It's a beautiful building. Also, in the past 3 years it employed probably a few thousand people and helped building supply companies' profits. (Fritz will do the same, they let go 400 something employees but will have a couple thousand working on the development of this project not to mention they will be spending money... something many people have stopped doing due to the economy). ANYWAY....L3 took a risk and followed through with it. its almost 100% completed (just needs residents). I don't know percentages, but how many developers started something in the past 2 years and finished it??? I would be curious to know. Anyway, this isn't a bad thing. it would be bad if they left it unfinished. Thats the bright side.
Posted by: Anakin-Marc - 12/15/2008 12:22:18 PM
I have no problem with them renting out units at the Montage, as long as the renters are qualified. I've seen far too many developments that were built to the highest standards, rented out as section 8, and within a few years, were practically destroyed (the developments in Oakland back in the 70s that were recently demolished due to upkeep costs come to mind). I would hate to see the same fate fall upon the Montage. Perhaps a comfortable compromise between luxury apartment and condominium can be reached, maybe giving the option to the renters to buy out their unit after renting for so many years with a good payment history. That would give residents incentive to stay, while at the same time opening up the Montage to more potential residents.
Posted by: DowntownRenoFan - 12/15/2008 12:52:02 PM
I do agree with stjoe56 that the vast majority of owners treat projects better than renters. The margin of that treatment deficiency declines the classier and more qualified your tenants are. The type of tenant that would qualify for this project (which could even be managed with HOA rules) would probably not be significantly different than the ownership pool.
The long term goal would be to fill the project with owners, but that is just not going to happen any time soon. Those of us who live on planet earth should be prepared for the reality that it could take a decade or more for the market to absorb these units. If you agree with that (I think it is more of a probability), you may just entertain the notion that the benefit of filling hte project with qualified users in the short term (subsidizing HOA's, taxes, bringing the building alive, bringing downtown alive) may substantially outweight the costs of having a rental pool for the short term.
Posted by: Gay Rodeo - 12/19/2008 1:10:14 AM
If Men Wielding Fire can grab that building across the street from the "First Street Parking Lot," that would allow that much less that needs to be done there. With the stadium completed, I sure hope there's something viable on the river by then besides just another one of Reno's fine blight lots.
Posted by: Teresa - 12/23/2008 9:00:55 AM
Did you see this RGJ story? http://www.rgj.com/apps/pbcs.dll/article?AID=/20081222/NEWS18/81222040&s=d&page=3#pluckcomments 5 days later they decide to report the Waterfront story. Get it together RGJ! Downtown Makeover published what was happening at the Belvedere months ago.