News 12-15-08 Fernando Leal Statement
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Posted by: Brian Egan - 12/15/2008 3:33:59 PM
Congratulations, Fernando, because I believe that this project is still a success. It may come about in a way that was not intended, but in the bigger picture, it will continue to be a transformational showpiece that raises the bar for downtown Reno. Thank you for your efforts, and I for one am pleased to hear that you are still involved and interested in the wonderful place we all call home.
Posted by: TOW - 12/15/2008 5:08:35 PM
I have double verified this information. Loans can not be closed for Montage buyers at this time due to the low percentage of sales. There are two possible solutions. 1) Buyers wait until more units are sold, and the project meets the Fannie Mae and Freddie Mac requirement of 50% of units sold for new developments. Meanwhile Fannie Mae and Freddie Mac may raise the requirement to 70%. This could stall sales for months or longer. We're in a brand new phase of the waiting game. 2) The other solution could be that Corus bank might provide all the loans to qualified buyers. Fellow buyers, what do you think of having only one possible lending source for your mortgage loan, no competition. I have heard that the Montage team has understood this dilemma for months. Yet, even in his letter, Fernando references the possibility that Corus bank might provide loans for people who can not get loans elsewhere. Well that would be all, not some, of the buyers who are not paying 100% cash for their home. Fernando did not acknowledge this new unfortunate reality. Distrust is growing because of this lack of direct communication.
Posted by: DowntownMakeoverDude - 12/15/2008 6:16:18 PM
Distrust? If you are truly a Montage buyer, then you know all you have to do is call him, and he'll talk and meet with you any time about your financing options. I know, because I received emails from Montage buyers who did just that. So why would you be no different?
Posted by: Larry - 12/15/2008 6:28:16 PM
Double verify this - a percentage of buyers (even in todays market) are able and will close on their units. Some will be cash based, asset funded, and real. Others...a large majority, will require financing - not 100%. What is that percentage? Only L3 and Corus knows in reality. To say you know the status of all 140+ loans is bogus.... unless youre the bank or L3 Development.
What makes you think if Corus finances loans that theyll be the only funder without competition allowed? Speculation...or actual knowledge of the deal specifics?
"Direct communication" should come from you, as an owner, to your developer and the bank - not here online.
Posted by: Bugsy - 12/15/2008 6:59:12 PM
Hey makeover dude, I bet some nice downtown photos from you will be a nice break from all this chaos. Get your coat and your camera and get to work. Im looking forward to them. ;)
Posted by: TOW - 12/15/2008 7:06:41 PM
Sorry Larry, The facts are not on your side. You are avoiding the reality of Fannie Mae and Freddie Mac's guidelines. If you are a buyer, call your lender and find out if they can still close your loan. DMD, I have explored financing options with other lending institutions, even the preferred lender. I'm qualified for a very good loan, but no one can close a loan unless Montage gets over the 50% mark. Fernando's letter says more information will be coming forth about loan programs from Corus bank. He does not have specific answers right now.
Posted by: LoftyinReno - 12/15/2008 8:08:58 PM
Sorry I have to agree with TOW. The distrust is in the spin. Mike - why do you keep giving him the all this 'you can do no wrong?'blog? Yes he's great guy. Yes this isn't his doing, the economy and all, but you want to praise him like the second coming when hey -communication from them has been abysmal, sales and promotion have been, even according to him 'something we were waiting for the finished product' If I told you how many times he was going to 'let me know what's happening' ...well I guess he finally did. All we have to do is call him? How about better communication to us?
The fact is we can't get our deposit back because instead of going to foreclosure (remember the 'good news?) it went instead to 'deed in lieu' which technically keeps us buyers under contract.
And Larry, you obviously have a take in this.Someone asked before if you worked there. I notice you haven't bothered to respond.
Sorry to be so personal but it's time you all heard from someone who really invested in this, was planning on moving in this month, and is now upset the spin makes us look like the bad guys for now thinking it's foolish to buy there.
Posted by: johnfree - 12/15/2008 9:33:00 PM
good job man, on scooping everybody. I really liked the dude's prologue to his statement, very straight, very realistic.
Posted by: RRB Mike - 12/15/2008 9:39:00 PM
The Montage is a wonder. I can't help but admire Fernando for taking a dare on this project, but also for his commitment to Reno (trench retail, Fitz). This project still WILL transform downtown. As other posters have commented, it just might take a while. I feel sorry that L3 and Fernando will not profit (and incur unspeakable losses) from all their efforts, but business is business. They were not the standard developer whores - they actually cared about, and believed in, Reno.
Posted by: DowntownMakeoverDude - 12/15/2008 10:18:29 PM
Lofty, I am not praising him like the second coming. Thats a little dramatic wouldnt you say? The problem is I am not a buyer. I dont know how he has been communicating with you, I just know how he is/has been communicating with me.
Show me another project in this state, hell in this country, where when it gets acquired by the bank, there is an across-the-board price cut for existing buyers with contracts that fall far below appraisal rates? A project that is lien free, complete, and has zero lawsuits from subcontractors? I dare you to find a project in Vegas in that good of standing; take it from someone who tracks projects down there and up here; there isnt if it broke ground in 2005 or after. I may not be a Montage buyer, but I know a thing or two about watching projects fall victim to tough times, and know the situation could be a lot worse than this.
The only reason you think this is spin is because its not readily on paper in front of you, ready to sign, YET. Many people said Fernando was simply spinning his project back in 2005 and few people had faith he could build and complete a building like the Montage. Yet he did. So sorry Lofty, to me that stands for something, to at least enough to give the guy time to finish his negotiations.
Everyone is freaking out before anything is even finalized, so yes, I would say its premature. Is it not possible for you buyers to have a little faith in his negotiations with Corus, a guy who delivered a project exactly as envisioned? At least for a few days until the deal is done and you are presented with the details? If the numbers come back and its not what you want, and theres no written clause the project wont turn into rentals, THEN freak out. THEN back out. Give them a chance to work out the details to show to you. And also, given some of the emails I have received, there ARE buyers who are witholding judgement on the situation until Fernando/Corus finalize a deal and present the new pricing. I also know there are buyers who, no matter what, have wanted out of their contracts for a year now, and even had Corus not taken the project back, would try to find some way to get out of them.
Posted by: DowntownMakeoverDude - 12/16/2008 7:40:58 AM
Also, lets stop accusing people of being Montage staff or having a stake in the project. I know who the Montage non-construction staff are: Cory Edge, broker extraordinaire, Eva C, Fernandos godsend and right-hand woman, Ron P, sales dude, and Melissa B, soon-to-be building manager, Jim the project manager and Fernando himself. Thats it. Larry happens to be a good friend of mine (yes, my friends read this site), a Reno native, and founder of Project EcoBrand (google it), and is passionate about this citys success, like me. So lets not accuse people of being Montage staff just because they see the positives AND negatives of this, and not just the negatives.
Posted by: Chris - 12/16/2008 8:26:41 AM
The only buyers who have to worry are the ones who made stupid investments in 2005. I bought my 2 bed at the Montage to retire in. I don't plan on selling it in 5 years, so other than the inflated price I paid for it, of which I am assuming I will get a decent discount, what else is there to worry about? I don't care if the project turns into rentals, it will bring more people into the building. Weekly-motel type people will not be the ones renting them at $2000 a month, I can assure you that. But I don't even think it will turn into rentals. Markets don't stay down forever. For those that bought at the Montage for anything other than a long term primary or 2nd residence, you are stupid! And you shouldn't get your deposit back.
Posted by: Ryan - 12/16/2008 8:50:39 AM
Thank you Mr. Leal for being a stand-up guy. Many in your situation would be looking to the government for a handout. I imagine it must be hard to take a bath on this project and then have people criticizing you for things that are out of your control.
I appreciate your perspective on business: "Nobody was cheated. No corners were cut. We invested, we delivered, and we lost. Thatís business."
If more people took your position our "leaders" would not be printing trillions of dollars to prop up failed businesses.
Before I step down from my soapbox I'll say this to all of you who apparently feel like Mr. Leal owes you something: get over it! L3 took a risk by investing in this property. They have created something great out of a run down, failed casino. No one forced you to enter into any contracts and if you lose your deposit, well, that's unfortunate but that's the risk you took when you signed the contract.
Posted by: LoftyinReno - 12/16/2008 9:46:22 AM
DMD- your right. In the light of day my comments seem overboard even to myself. I 'll wait to hear the deal before I comment further. I'm just not excited about Corus as the owner of the other 80% of the building. I'm also frustrated that we were so close, but maybe we still are. To Larry, take please take my sincere apology if I offended you.
Posted by: Larry - 12/16/2008 10:41:42 AM
Aw shucks, Lofty...no harm, no foul. Im happy theres opportunity for success at this development - especially in this economic climate. Its a good thing for downtown Reno, and more importantly, the buyers that deserve a price break and some financing assistance (if that all comes through). I want to believe it will work out for the best for everyones personal circumstances - like the majority of the commenters here.
I have to totally agree with Chris and Ryan... and add that this is ultimately very personal Montage business...interesting dialogue, but not worth getting too worked up over! Time will provide everyone with the answers theyre seeking here - and fortunately, you cant rush time.
Merry Christmas! (There...Ill say it, though its not politically "correct" these days);).
Posted by: Downtowner - 12/16/2008 2:09:40 PM
So, what about the Ruth's Chris? Is that still coming? Weren't the Ruth's Chris people just here looking at the site a few weeks ago?
Posted by: Betty - 12/16/2008 2:24:58 PM
I received a call from RGJ yesterday, asking personal questions about my purchase at the Montage ("how much did I pay for my unit?") and then pointedly asking "are they going to give you your money back"?
Feeling very put-off, I asked the reporter to email me so I could write out my response and therefore not get mis-quoted in the paper. I want to share my reponse here, since it turns out she was on a hunt for a disgruntled buyer who wanted their money back, or at the very least, a buyer she could paint in that light.
My response is below:
For the past three years I have been involved with the Montage as a buyer, and also as an interior designer working with several of the prospective buyers as well as contributing to the models. It has been an exciting time to be a part of the growing excitement of the transformation in downtown Reno. Everyone at L3 has been great to work with in both capacities, and I am happy to hear that those relationships with stay in place.
As a buyer, I remain enthusiastic about the Montage and am exciting to proceed with the purchase of my 1 bedroom unit on the 21st floor. The quality and uniqueness of the project as a whole is a first for Reno and I can't wait to move in and become a part of the community that will be created.
Having worked with several buyers on selection of colors and finishes, window treatments, and interior design, I've also gotten to know one on one several of my soon-to-be-neighbors. One thing is certain, despite the uncertainty of the market, nearly everyone I have worked with can not wait to get moved in! I am sure you will find in your research that the buyers who signed three years ago remain unwaivering in their decision and are more than anxious to get moved in and spend what looks to be a beautiful winter in their new home or second home at the Montage.
Posted by: Montagebuyer2 - 12/16/2008 2:36:06 PM
Fernando Leal is probably one of the best things that has happened to Reno in a long time. He took a chance, he followed his dream, he built his dream, and it is very unfortunate that some of the folks in Reno do everything they can to negate change. Fernando is loyal, honest, driven, and his project is unmatched in terms of luxury, value, amenities, and vision. Considering the current market conditions I think he has done an excellent job and the RGJ was looking for scandal. I personally know 3 buyers they called and the reporter tried to 'spin' the story into a negative tone. I am very impressed with with what Fernando has done and I am going 100 % on my condo. I believe in Fernando, The Montage, and although I have my doubts about Reno (and I can talk a little trash - I have been here more than 30 years) - the only way anything ever changes is by people standing up for what they believe in and taking a chance. Fernando / The Montage - thank you and good luck!
Posted by: Chris K. - 12/16/2008 2:49:24 PM
I'd like to express my thanks to Fernando, L3, and the entire crew who participated in renovating this building and turning it into a residence the quality and beauty of which Reno has not seen downtown. The building is truly gorgeous. Moreover, L3 and Fernando in particular have a vision for transforming the downtown area into a liveable work of art. The retail space over the trench cover, as well as renovations to the other buildings, including the old Fitz, are very exciting. When I moved to the area 10 years ago, NOBODY wanted to be downtown. L3 is a critical player in breathing life into the area, in believing in the people, beauty and quality of life in Reno. Thanks, Fernando, and thanks to all craftsmen and architects who have dedicated their tremendous time and energies into this project.
Posted by: Raymond - 12/16/2008 2:49:53 PM
For all you Montage fans, you might want to go over to the Reno Realty Blog and read a comment by CorusFollwer on the Corus thread.
He describes the NINE high rise condo projects (the Montage will be No. 10) that Corus has taken back in other places and describes what Corus does when they get a condo project back.
They auction them off.
Bad news Montage fans. You can go ahead and buy today at your "discount price" and then watch in the Spring when Corus auctions off units just like yours for 50% less than your "discount price".
And Mr. Leal, no longer being the owner, wont be able to do a darn thing about it.
Posted by: Gene from San Francisco - 12/16/2008 3:22:39 PM
Is there no marketing budget for this huge venture?
Posted by: Justin - 12/17/2008 3:24:38 PM
I just want to add that I appreciate the hard work Fernando Leal has put into this project. It's sad that things didn't turn out like expected, but at least he built what he promised (unlike the Belvedere & to a lesser extent, the Riverwalk Tower). As they say, timing is everything. Unfotrunately, the timing could not have been worse. With that said, I do think this project would have been met with greater success if the pricing were more "realistic".
Danny, surely you can see progress has been made downtown. Of course we'd all like to see more high-rise development downtown, but think of what has taken place over the last 4-5 years (e.g. Whitewater Park, Downtown Ballroom, 210 North, Divine Ultra Lounge, Imperial Bar & Lounge, AAA Baseball Stadium construction, Holcomb Townhomes, West Street Market, Paladio, etc.) Either way, I hope you enjoy Portland! It is a truly is, in my humble opinion, the finest midsize city on the West Coast. Great food, friendly people (generally speaking), good public transit, nice parks/recreation, etc.
Posted by: R Downey - 12/18/2008 12:16:11 PM
Reality, most of us who bought into the Montage were impressed with the new vision of downtown Reno. The vision goes far beyond the Montage, it was the whole package Mr Leal was bringing to the city. That vision is now gone, Chorus Bank does not have a vision nor does it care about Fernando's vision. I'm not impressed with Fernando as everyone else is. I feel he could have responded to this situation well over a year ago when everyone saw that the Homes crisis was going to greatly impact our economy. That is when deals should have been explored, now it will be just another failed project. I asked months and months ago if there was a plan to lower the prices, the answer was a flat "no". Then it was stated that "if" it was determined that prices should be lowered it would be lowered to all so no one experienced negative equity. I really don't know when that was explored or if it was even explored. Remember in the early days there was absolutely "no" communication between the developer and buyers. We just put up our money signed on the bottom line and sat back and waited. Well the wait is over and none of us really knows where this project is heading from here. I know I will not close under the current situation and will take my lumps, because it is better to take a 50k hit then a 100-150k hit down the line. Maybe we will all know more after the first of the year when Chorus Bank decides what they are going to propose to us buyers. Units must be sold to make this work and currently there is "no" plan to sell more units. To me this turn of events has "no" positive aspect, and to be honest, my wife and I are very disappointed. We will wait to hear from Chorus Bank but I don't think it is going to be music we want to hear.
Posted by: LoftyinReno - 12/19/2008 11:21:34 PM
I have to ask, and I know I said I'd wait, but has anyone heard anything? DMD you recommended waiting, but our life goes on too. I'd like to know if this is something I'm supposed to be waiting to invest in or should I just cancel future investments and/ or any winter vacations I might have on the chance this is coming up? You had mentioned they stay in very good contact with you. Has anyone heard anything? As a buyer my contact/Realtor Patty has left. Any suggestions or are you in contact with them?
Yes I can call them directly.I'll try that tomorrow.Really. chasing down my investment is the least I can do.
Posted by: RRBmike - 12/20/2008 5:04:04 PM
There is a web site I found for Montage Buyers. http://montagebuyer.wordpress.com
Posted by: Paul R. - 12/22/2008 2:42:18 PM
While I share general admiration and support for L3 voiced in these comments, one crucial fact seems to have escaped emphasis: the Montage has now taken over THREE YEARS!! to complete and is still not in a deliverable form to buyers. This is by any standard, in any market, an absurdly long time for a project of this scale, new construction, re-use, or otherwise, and just about twice as long as the development team originally promised. I believe this is the major problem that has lead to such "bad timing" for all parties involved and one the developer and their bank may have to confront as an issue that will motivate re-interpretation of the purchase contracts for current buyers.
Posted by: TOW (Tired of Waiting) - 12/23/2008 6:19:04 PM
Paul R, I hope you are right. I feel like my deposit has been held hostage for years. I planned to have a home by late 2007. How much longer do we have to wait? I'm wondering if anyone has heard any news this week. I noticed that the sign for the sales office has was not out yesterday or today. Are they closed?
Posted by: stjoe - 12/24/2008 10:09:37 AM
1. Corus will finance - allegedly a 30-yr ARM with a 5-year lock.
2. First closing is expected around the third week of January 2009.
Posted by: wifeof buyer - 12/25/2008 10:07:03 PM
Interesting blog. I'm struggling to keep up as there has been so many roller coaster decisions on this property. My last thought is that although he project has been discounted, the new price/ risk ratio is still too high to proceed with a purchase. The 60 minutes show didn't help, but as an investment, how can we not think these condos will continue to go down before they go back up.