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June 4, 2009

Developers, Banks Doing to Renegotiation Dance

If you've been wondering why many condo developments have been slow to make broad price cuts in the face of overwhelming evidence of a weakening market, this month's issue of The Real Deal has your answer for you: Banks. "What incredulous buyers often don't realize is that across-the-board price cuts have not been easy for most developers to make, because price reductions must be cleared with lenders," the article says. A few of the major development marketing groups like Corcoran and The Developers Group report that the debt holders are starting to play ball, but they are exacting tougher terms out of developers in return for lowering what's referred to as the "release price" for a new unit. Desperate at this point, developers are increasingly biting the bullet. "In September, [developers] weren't willing to see there was going to be this type of negotiation," said Jacqueline Urgo, president of the Marketing Directors. "They are much more open now." The article doesn't name any Brooklyn names but it's probably a good bet that developers of projects like One Brooklyn Bridge and Oro that were highlighted in another Real Deal article this month as only being about 1/5 sold have had some intimate conversations with their lenders in recent months.

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Comments

What may be right, look at this PDF with lots of Brooklyn condos on it.

http://s3.amazonaws.com/trd_three/images/89480/ghost_towers.pdf

Posted by: streetwise at June 4, 2009 10:05 AM

the

***Bid half off peak comps***

Posted by: Brownstones Half Off at June 4, 2009 10:23 AM

A day late and a dollar short.

27 May 2009 | http://therealdeal.com/newyork/articles/new-york-city-s-future-ghost-towers

03 JUN 2009 | http://curbed.com/archives/2009/06/03/arrested_development_the_ghost_towers_of_tomorrow.php

Anything new to report?

Posted by: CookieCutterBrownstone at June 4, 2009 10:30 AM

This makes a lot of sense to me. I can think of a lot of ways that developer-lender negotiations could become unproductive in a situation where lender consent is required to reduce prices. This could be a very tough knot to untangle and there are a lot of ways that the collective outcome could end up being in no one's best interests.

Obviously a big and immediate price cut across the board is the best outcome all around, but I can understand how the developer and the lenders can get caught up in agreeing on how things will work out between them vis-a-vis the price cut.

Posted by: lechacal at June 4, 2009 10:41 AM

"Banks. "What incredulous buyers often don't realize is that across-the-board price cuts have not been easy for most developers to make, because price reductions must be cleared with lenders,"

Lets parse this statement for a second. If Banks don't go along with price reductions then can we say the Condo boom is over, right? If the Banks reduce prices then your Condo has lost some "value", right? When all the New Condo construction comes online will it affect the rental market because they can't sell??? What will happen when they go Bankrupt and there is no one around to maintain your Condo?? What will happen when they go Bankrupt and there the Judge or Trustees liquidate the Asset and some vulture buy the units and put "Low-Income" or Welfare recipients in your new shinny Condo????

Team Bear the Assheads want "Data" and believe you cannot make a valid argument without it but there is antidotal evidence that the Mutant Asset Bubble is finished!

Say buh bye Retards! Thanks for the good times...

The What

Someday this war is gonna end..

Posted by: Return of The What at June 4, 2009 11:06 AM

Developers, lenders - I've never really consciously seperated the two. As far as I'm concerned (which aint very far) they both fall under the umbrella of "seller". The lenders are most certainly on the hook for even higher losses if they don't wise up now. From bidding wars on properties to selling wars on qualified buyers.

Nothing complicating about this at all. Accept the highest buyer-bank-approved bids (this is the market talking to you) and move on to the next venture. Take your medicine. It'll be decades before prices have a fighting chance to return to these levels. It's downright irresponsible to think otherwise. We taxpayers own the banks right now. Minimize my loss dammit!

"Anything new to report?"

Nope. Well, maybe a new and lower Case-Shiller number for NYC come May 30th.

***Bid half off peak comps***

Posted by: Brownstones Half Off at June 4, 2009 11:18 AM

"Nothing complicating about this at all. Accept the highest buyer-bank-approved bids (this is the market talking to you) and move on to the next venture. Take your medicine."

The sad is BHO they can't do it! If they take reduced prices then the underlining mortgage will have to be modified. The investor will have to agree to and it may trigger insurance on it (CDS). Then the bank will have to "write Down" the loan portfolio and they will take a hit on the Balance sheet! This is a fucking mess and you will see empty and uncompleted Condo developments for the foreseeable future.

"Nope. Well, maybe a new and lower Case-Shiller number for NYC come May 30th."

No that's not data! No No NO!

"We taxpayers own the banks right now. "

And the Kleptocracy owns us..

Where is Team Bullshit at????

The What

Someday this war is gonna end..

Posted by: Return of The What at June 4, 2009 11:26 AM

but [banks] are exacting tougher terms out of developers in return for lowering what's referred to as the "release price" for a new unit

Anyone know what kind of tougher terms? more equity? I couldn't find that article.

sounds like good news for buyers.

Posted by: joe_the_bummer at June 4, 2009 11:35 AM

I hate when I'm right, not!

Plan to Help Banks Clear Their Books Is Halted

http://www.nytimes.com/2009/06/04/business/04bank.html?_r=2&partner=rss&emc=rss

WASHINGTON — The Federal Deposit Insurance Corporation indefinitely postponed a central element of the Obama administration’s bank rescue plan on Wednesday, acknowledging that it could not persuade enough banks to sell off their bad assets.

Re-read my post at 11:26!

Many banks have refused to sell their loans, in part because doing so would force them to mark down the value of those loans and book big losses. Even though the government was prepared to prop up prices by offering cheap financing to investors, the prices that banks were demanding have remained far higher than the prices that investors were willing to pay.

Well well well those shinny new turds are just sitting there collecting rust!

"No one knows exactly how many losses are buried in the troubled mortgages on banks’ books, but some analysts estimate that the unrecognized losses total more than $1 trillion. Under accounting rules, banks do not have to write down the value of most mortgages unless they sell them or they fall delinquent."

Ticking Nuclear Bombs..

The What (Where in the hell is Team Bullshit at??!!!!)

Someday this war is gonna end...

Posted by: Return of The What at June 4, 2009 12:02 PM

"The sad is BHO they can't do it!"

They can do anything they put their minds to. It's about minimizing losses. All out abandonment is worse than getting SOMETHING. So I'll include the investors under the "seller" umbrella. Modify the mortgage, guys. Let's get to the bottom of this [bottom - ha ha ha...!]

Jajing! You can doooooiiiiit!

***Bid half off peak comps***

Posted by: Brownstones Half Off at June 4, 2009 12:19 PM

...there's no excuses! They have the power to accept a smaller I-beam now.

***Bid half off peak comps***

Posted by: Brownstones Half Off at June 4, 2009 12:22 PM

Oh fuck me!!!! Man read this story!!!!

NYC Turns Luxury Units Into Shelters For Homeless

http://wcbstv.com/local/nyc.homeless.luxury.2.1030856.html

The condos couldn't attract buyers in the current housing market. Now they're filling a need for some of the city's "unprecedented" number of homeless families, according to a report in The Daily News.

The apartments in Crown Heights were supposed to sell for $250,000 to $350,000. The amenities include granite countertops, terraces, marble bathrooms and walk-in closets.

Developer Avi Shriki says he had to come up with a Plan B "when the market went south." He signed a 10-year contract with the Bushwick Economic Development Group to turn the building into a shelter.

Oh that where the get the money to buy 10 million dollar homes in Midwood!!!!

Fuck me! Fuck me! Fuck me! Fuck me! Fuck me! Fuck me! Fuck me! Fuck me! Fuck me!

The city is paying about $2,700 a month for each apartment. The figure also covers social services, including job counseling.

The Department of Homeless Services provides temporary emergency shelter to homeless individuals in a safe environment. There are a variety of ways for the homeless in New York City to receive services. Go to the DHS' website for more. DHS.

ROTFLMMFAO!!!!!!!!!!!!

Game over retards! Going to post this shit all over!!!!

The What (See....)

Someday this war is gonna end...

Team Bullshit where are you???!!!!!

Posted by: Return of The What at June 4, 2009 12:29 PM

What: The developer of BellTell Lofts was talking to the city about the same thing; Oro is prime candidate with 80% unsold.

Posted by: BH76 at June 4, 2009 12:36 PM

"What: The developer of BellTell Lofts was talking to the city about the same thing; Oro is prime candidate with 80% unsold."

Yep yep yep!!!!! The assheads believe I'm joking but this is very serious!!!

BH76 Have you seen Team Bullshit????!!!! Tell them The What wants to chat.

The What

Someday this war is gonna end....

Posted by: Return of The What at June 4, 2009 12:52 PM

I just want to say Team Bullshit has no credibility with me!!! Mother fuck them with the "data" nonsense!!! If somebody wrote a story about "Things looking brighter" the retards would be out in full forces but when the "data" does not favor them they hide like little bitches!!!! Over and done! Five months retards, five months..

The What

Someday this war is gonna end....

Posted by: Return of The What at June 4, 2009 1:13 PM

"Oh fuck me [classic]!!!! Man read this story!!!!"

Oh come on, What. 12:29pm? You don't start in the Links thread? You get asessed a late fee for that. I'm afraid you were too optimistic (condos to low income housing vs no-income housing).

BellTell too? The originally proposed site for Real World? This is MASSIVE!

***Bid half off peak comps***

Posted by: Brownstones Half Off at June 4, 2009 2:13 PM

"Oh come on, What. 12:29pm? You don't start in the Links thread?"

Assessment Late Fee of 19.99 goes into the Team Bear fund... Hey that's Strip Club money!

"I'm afraid you were too optimistic (condos to low income housing vs no-income housing)."

Oh Doggie I see a Shit Storm on the horizon!

"BellTell too? The originally proposed site for Real World? This is MASSIVE!"

Massive like Massive! BHO it's just a matter of time. Five months from now the collapse is going be MASSIVE!

BTW Have you seen any members of Team Bullshit around?? I have my AR-15 at the ready and I feel like "Duck Hunting" today. Tell them to poke their heads out...

The What

Someday Team Bullshit is gonna "Man Up"...

Posted by: Return of The What at June 4, 2009 2:27 PM

Oh and where is Adam Dahill?????? I called his cell phone but it's disconnected!

Tell Adam Dahill I'm looking for him!

The What (Funny how they run!)

Someday this war is gonna end...

Posted by: Return of The What at June 4, 2009 2:29 PM

What, you and Adam Dahill know each other? If he picked up, were you going to say "Hi, this is the What"?

Posted by: mopar at June 4, 2009 3:13 PM

What, you and Adam Dahill know each other? If he picked up, were you going to say "Hi, this is the What"?"

I would not say "Hi this is The What" I would ask about the imploding Rate Locks! Remember he was talking smack about all the deals he had but the Banks are trying to rescind the locks because they can't do the deal now, higher rates! Mopar call your Mortgage Broker he/she will tell you rates are up about 75-125 basis points!

The What

Someday this war is gonna end..

Posted by: Return of The What at June 4, 2009 3:27 PM

"Remember he was talking smack about all the deals he had but the Banks are trying to rescind the locks because they can't do the deal now, higher rates!"

ROTFLMMFAO That's alot to read sorry guys..

The What (Im' going to lunch)

Someday this war is gonna end...

Posted by: Return of The What at June 4, 2009 3:29 PM

Not 20!?

Posted by: mopar at June 4, 2009 10:54 PM

What, I doubt you would even know which end of an AR-15 to point away from you.

Posted by: lechacal at June 4, 2009 11:11 PM