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No Choice But To Relist For Less

It’s Friday desk clearing time for this blogger. “The expanding choices of new homes appealed to Steve Hawthorne, a co-owner of a shoe store in Hudson, Ohio. After owning older homes for most of his life, he said, he was burned out by maintenance costs. Plotting a move west, he bought a two-bedroom house in Summerlin, a planned community outside Las Vegas. Hawthorne said he was able to negotiate a new washer and dryer and epoxy flooring in his garage. ‘In the grand scheme of things, they were not big-money items, but they were nice amenities,’ he said. And by opting to buy a new home when he did, Hawthorne said, he encountered less jockeying from rival buyers. ‘When money was cheap, competition was immense,’ he said. ‘When I closed at the beginning of September, there was hardly anyone looking.'”

“An Upper East Side home owned by the estate of a late oil heiress has been hit with a massive $10 million price cut. The eight-bedroom dwelling of the late Anne Bass, ex-wife of Texas oil billionaire Sid Bass, first hit the market for $70 million in May. It’s now down to $60 million. She passed away in 2020 at age 78. Some top brokers have speculated that this price drop reflects a certain reality — that, as one said, ‘buyers care about real estate, not the names of the people who lived there, no matter how wonderful they were.’ The broker, requesting anonymity, cited an Upper East Side home formerly owned by the late Joan Didion, the legendary author of ‘The Year of Magical Thinking’ as another example of ‘wishful, magical thinking’ when it comes to real estate pricing.”

“Squatters have taken over a multi-million dollar mansion on the border of Beverly Hills. Squatters have occupied the four-bedroom Beverly Crest mansion — listed on Zillow for nearly $4.6 million — for several months, outraging neighbors, ABC7 reported Tuesday. The squatters not only appear to be living in the home, but even charge admission for advertised late night parties, the neighbors told the local outlet. The house was most recently owned by MDRCA Properties LLC, but the company filed for bankruptcy last year, NBC4 reported. Los Angeles Police Department Senior Lead Officer James Allen, who’s handling the investigation into the alleged squatters, told the Daily Mail that the house’s ownership is in question and entering foreclosure, but people living there claimed to know a former owner who invited them to stay there.”

“‘I guess we can say they’re squatters,’ Allen told the Daily Mail. ‘But they’re squatters to the owner that’s in foreclosure to the bank. We’re working on a plan with the bank to evict the individuals because there’s no one at this point to evict them and say they’re there illegally.'”

“Bondholders of the debt secured by 62 San Francisco apartment buildings are likely to see a return of less than 50 cents on the dollar now that the transfer of the buildings from former owner Veritas to new owners Brookfield and Ballast Investment has gone through. The commercial mortgage-backed securities debt on the 1,700 units, which Veritas defaulted on early last year, sold in two tranches. They faced a $200 million holdback for ‘fees, advances and expenses,’ according to the servicer, so the net was only about $200 million — a 56 percent loss.”

“It’s ‘rare’ for even a portion of a holdback to be released later, which likely means a ‘huge loss for investors’ on the debt, said Daniel McNamara, chief investment officer at CMBS investor Polpo Capital. His firm did not invest in the deal. ‘It’s devastating,’ he said, adding that those with C-rated bonds got paid back even less and D bondholders went to zero. ‘As a CMBS credit investor, you get a pit in your stomach because it’s just a massive loss.'”

“Jorge Abreu’s Elevate is the latest Texas syndicator to face foreclosure. The Dallas-based investor defaulted on a $38 million loan tied to the Selena, a 446-unit apartment building at 250 Uvalde Road in Houston, after falling delinquent on loan payments late last year, according to Morningstar. This month, Arbor Realty Trust, a lender with exposure to the struggling multifamily space, filed to foreclose. Arbor also foreclosed on a portfolio owned by Jay Gajavelli’s Applesway Investment last year after the syndicator defaulted on a $229 million loan.”

“The filing follows months of trouble at the Houston property, according to an investor in the deal. The investor, who requested anonymity, said Abreu had made a capital call on the Selena and another Texas deal in the first half of 2023. The investor had already put $100,000 into both properties and declined to put up more cash. One of the properties was struggling with occupancy, he said — a common problem for syndicators who rely on renovations to raise rents. Some have struggled to complete planned work and weathered the hit to revenues as their monthly debt payments have soared.”

“Two other Houston deals sponsored by Abreu — the Milo and the Peri — have also been hit by higher rates. Both properties were watchlisted last year. The Selena foreclosure follows similar troubles for Austin-based syndicator GVA. The multifamily investment firm, headed by Alan Stalcup, has defaulted on properties across the Texas Triangle. Lender LoanCore Capital has filed to foreclose on a handful of them. Stalcup has similarly struggled with cash flow amid rising debt payments on his floating-rate loans.”

“A recent appraisal for 1670 Broadway, a 690K SF office building in downtown Denver, pegged the building’s value at about $131M, or roughly 55% of what it was appraised for in 2018 when it was last purchased, according to Morningstar. The building’s new value comes as Denver’s downtown office market struggles to recover from the pandemic. 1670 Broadway’s struggles are happening as a glut of loans secured against Denver commercial properties is coming due. About $4.7B of commercial real estate loans in Denver will come due by the end of the year, representing about 26% of the $18.4B in outstanding loans, according to data from CommercialEdge.”

“Meanwhile, several of Denver’s most famous buildings remain under significant financial pressure. The Wells Fargo Center at 1700 Lincoln St. was placed in receivership in August following news that coworking company WeWork would leave the building. It is unclear how much debt is still attached to the 1.2M SF building. Other prominent properties like the Denver Energy Center at 1625 and 1675 Broadway and 410 17th St. have gone into foreclosure as well. The Denver Energy Center was sold in 2022 by its lender, JPMorgan Chase, at a foreclosure auction for $88.9M, property records show. 410 17th St. was placed in foreclosure in July after a joint venture between Miami-based investment firm Rialto Capital Management and Denver development firm Steelwave defaulted on a balance of more than $96M.”

“210 Simcoe St., No. 2211, Toronto. Asking price: $769,000 (September, 2023). Previous asking price: $782,000 (September, 2023). Selling price: $722,000 (October, 2023). This one-bedroom-plus-den suite in a 25-storey tower near Toronto City Hall tried to outshine competing units for sale with sleek home furnishings and what it supposed was a low asking price of $782,000. A few buyers took notice – until a neighbouring seller slashed their price below $700,000. ‘[The other seller was] super motivated, dropped the price all the way to $699,000 and were holding back offers, which would generate some buzz,’ said agent Munira Ravji. ‘They ended up selling for $730,000 with parking, and that blew everyone out of the water. No one could compete.'”

“Ms. Ravji’s unit had no parking – and no choice but to relist for less as well. They posted a new asking price of $769,000 and cut a deal for $722,000 a few days later. ‘They could flip it renting, but they decided it was something they absolutely didn’t want to do,’ Ms. Ravji said. ‘Our rental market is such a mess. If we didn’t sell now at this price, there was potential we could go under $700,000.'”

“At least two customers of a collapsed building company are set to lose their deposits totalling $30,000 as new details emerge about the dire state of the firm’s financial situation. Jessica* and her mum bought land in the Melbourne suburb of Doreen side-by-side, with plans to build their dream homes on the respective blocks. They both signed up to Montego Homes as their builder 18 months ago. But unfortunately for the family, last week, Montego Homes went into voluntarily administration and ceased trading immediately, plunging the fate of 100 homeowners including them into jeopardy.”

“Jessica does not appear to be covered by domestic builders insurance because as she was checking her and her mum’s paperwork, she realised they had never received a policy number. ‘They (the building company) appear to have breached their responsibilities. They were supposed to purchase this insurance,’ Jessica told news.com.au. A total of 63 homeowners affected by the collapse didn’t have insurance. At the creditor’s meeting, which finished on Thursday afternoon, the administrators revealed that their investigations had found that Montego Homes had taken out a $200,000 loan just before they went under.”

“There was only $21,000 left in its bank account when external administrators were appointed and there appears to be minimal assets. Administrators have already started selling company property like iPads and phones at auction. It’s understood company cars were on leases so they are unlikely to generate any additional recovery money.”

Related Posts

Sellers Were Overpricing Because They Could Get It

https://www.youtube.com/watch?v=yPAs0FfXS3s https://www.youtube.com/watch?v=zZWoVegZRoI https://www.youtube.com/watch?v=5eYXOAWZ0z0 https://www.youtube.com/watch?v=nZjRsEmOiqY https://www.youtube.com/watch?v=iBiSwleTClQ

This Post Has 55 Comments

  1. ‘Abreu had made a capital call on the Selena and another Texas deal in the first half of 2023. The investor had already put $100,000 into both properties and declined to put up more cash. One of the properties was struggling with occupancy, he said — a common problem for syndicators who rely on renovations to raise rents’

    Here’s the real story that I’ve followed since it popped up years ago. Greedy guys got to a lender with a piece of paper: a pro forma income statement. On this magical piece of paper it says ‘rents-rocket go now’. And the lender would loan them the amount based on this hypothetical rent increase. Like so many things bubble related:

    It works as long as the market is going up.

  2. “Squatters have taken over a multi-million dollar mansion on the border of Beverly Hills. Squatters have occupied the four-bedroom Beverly Crest mansion — listed on Zillow for nearly $4.6 million — for several months, outraging neighbors, ABC7 reported Tuesday.”

    Nature abhors a vacuum.

  3. ‘ ‘It’s devastating,’ he said, adding that those with C-rated bonds got paid back even less and D bondholders went to zero. ‘As a CMBS credit investor, you get a pit in your stomach because it’s just a massive loss’

    How do those 4% cap rates look now bay aryans?

    1. “D bondholders went to 0.”

      Even after some googling I can’t seem to find a standardized accepted definition of a D bond.* I guess it’s one quality grade below C. Well, you get what you pay for.

      —————
      *In the investment sense. I’m familiar with the scientific d bond.

  4. ‘investigations had found that Montego Homes had taken out a $200,000 loan just before they went under’

    Why would they do that? It’s like they knew they were going to bail!

    ‘There was only $21,000 left in its bank account when external administrators were appointed and there appears to be minimal assets. Administrators have already started selling company property like iPads and phones at auction. It’s understood company cars were on leases so they are unlikely to generate any additional recovery money’

    The phones are probably leased too. At least you got the ficus trees and coffee maker.

    1. “There was only $21,000 left in its bank account when external administrators were appointed . . ”

      there was still 21 large unspent?!
      what, is there no Mons Venus nearby?
      no Indian casinos?
      Mon Dieu, at least go out in style at the local Chik-fil-A.

      Sacrebleu

  6. Federal prosecutors are investigating General Motors’ driverless car unit over its handling of an accident involving one of its driverless cars.

    Cruise acknowledged the probe, as it released findings from its review of the October 2023 incident, in which one of its cars dragged a pedestrian who had been thrown into its path.

    California revoked Cruise’s permit.

    Cruise, which also pulled its cars from the road elsewhere, said its actions in the aftermath fell “woefully short”.

    “We are profoundly remorseful both for the injuries to the pedestrian, as well as for breaching the trust of our regulators, the media, and the public,” the company said.

    The report commissioned by GM and conducted by an outside law firm found the firm did not provide a full picture to regulators in the immediate aftermath of the accident and did not update the press as it learned more.

    It ascribed these lapses to “a failure of leadership within Cruise, inadequate and uncoordinated internal processes, mistakes in judgment, an “us versus them” mentality with government officials, and a fundamental misunderstanding of regulatory requirements and expectations”.

    It said technical issues had prevented a full viewing of its video of the accident, in which the car dragged the pedestrian for about 20 feet. But staff did not verbally provide an account to make up for that lapse, the report noted.

    Staff also responded to press inquiries without being aware of the pull over manoeuvre and did not update their accounts.

    Cruise, which is majority owned by General Motors, was one of the first companies to get a commercial robotaxi service going, winning approval for regulators to start charging for rides in San Francisco in August despite objections from activists, police and fire officials and others.

    At the time, Cruise hailed it as an “historic milestone”. It had predicted that the business could generate $1bn in annual revenue by next year.

    https://au.news.yahoo.com/gm-owned-cruise-admits-failures-215916795.html

    2. We seem to be hearing less and less in the media about the imminent mainstreaming of self driving cars.

        1. Self-driving, flying cars controlled by generative AI, purchased with cryptocurrency and powered by green energy…

  7. 25 Republican governors have signed a letter stating their support of the State of Texas to repel the INVASION at the southern border.

    They’re not migrants. They are criminal invaders.

    3. Invasion Of US Underway: Top Ex-FBI, DHS & Other Agency Officials Pen Urgent Warning To Congress

      by Kelen McBreen
      January 26th 2024, 9:20 am

      Ten retired FBI directors and experts in counter intelligence sent a letter to GOP House Speaker Mike Johnson (La.), Democratic Senate Majority Leader Chuck Schumer (N.Y.), and the chairs of House and Senate intelligence and homeland security committees on Jan. 17.

      The letter stated Biden’s open borders are a “specific threat that may be one of the most pernicious ever to menace the United States.”

      The former senior executives of US intelligence continued, “The threat we call out today is new and unfamiliar. In its modern history the U.S. has never suffered an invasion of the homeland, and, yet, one is unfolding now. Military age men from across the globe, many from countries or regions not friendly to the United States, are landing in waves on our soil by the thousands – not by splashing ashore from a ship or parachuting from a plane bur rather by foot across a border that has been accurately advertised around the world as largely unprotected with ready access granted.”

      “It would be difficult to overstate the danger represented by the presence inside our borders of what is comparatively a multi division army of young single adult males from hostile nations and regions whose background, intent, or allegiance is completely unknown. They include individuals encountered by border officials and then possibly released into the country, along with the shockingly high estimate of ‘gotaways,’ meaning those who have entered and evaded apprehension.

      “In light of such a daunting, unprecedented penetration by uninvited foreign actors, it is reasonable to assert that the country possesses dramatically diminished national security at this time. The nation’s military and laws and other natural protective barriers that have provided traditional security in the past have been thoroughly circumvented over the past three years.”

      The group pointed out that in 2021, the demographics of people coming across the border began to shift as Border Patrol saw countless military-aged men from around the world illegally enter the nation.

      1. “In its modern history the U.S. has never suffered an invasion of the homeland”

        Not since the War of 1812.

        We are living under an unelected, illegitimate, occupation government.

        Biden, Garland, Mayorkas, you are all guilty of TREASON ☠️

      2. Remember the multi-trillion dollar “Global War On Terror”? What a crock of you-know-what THAT was.

        I’m totally on board with viewing this as an invasion. But it’s worth remembering it’s been going on since before the Biden administration.

        IIRC, the trade-off for the Reagan-era amnesty was that the government would clamp down on illegal entry. How many millions have entered since then?

        1. How many millions have entered since then?

          So many that the following states will license them to operate a motor vehicle:

          California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, New Mexico, Nevada, Massachusetts, New York, New Jersey, Oregon, Utah, Vermont, Virginia and Washington.

          That’s right, 17 and counting.

          And notice Hawaii is on the list. It is my understanding that Hispanics almost outnumber Polynesian Hawaiians in the Aloha state. The Hawaiians are now a small minority in their ancestral homeland: replacement theory in action.

    4. Federalism in action with the added bonus of SCOTUS taking on the bloated administrative state via the Chevron doctrine.

      1. Tenth Amendment
        The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

  9. “Squatters have taken over a multi-million dollar mansion on the border of Beverly Hills. Squatters have occupied the four-bedroom Beverly Crest mansion — listed on Zillow for nearly $4.6 million — for several months, outraging neighbors, ABC7 reported Tuesday.

    Few things are as heartwarming as seeing LA’s high-net-worth libtards reaping the fruits of the societal breakdown the party of Soros has been promoting for decades.

  11. Thieves Drag ATM Machine Down Street During Oakland Bank Heist

    by Dan Lyman
    January 26th 2024, 5:02 am

    Brazen thieves were seen dragging an ATM behind a van down an Oakland street during a brazen bank heist caught on camera this week, according to reports.

    The shocking incident unfolded just before 7:30 a.m. on Sunday in the Bay Area, less than a mile from an In-N-Out location that is shutting down due to rampant crime in the area.

    Authorities say suspects used tools to dislodge a cash machine outside a Bank of America about an hour after another ATM was stolen from a business nearby.

    Footage shot by a witness shows the thieves fleeing the scene with the damaged machine in tow amid a shower of sparks.

    BAY AREA STATE OF MIND

    @YayAreaNews

    Video captures a group of thieves on a bank heist mission targeting Bank of America yesterday morning in Oakland, California

    Jan 22, 2024

    https://x.com/YayAreaNews/status/1749611970188435702?s=20

    1. “…The shocking incident unfolded just before 7:30 a.m. on Sunday…”

      Shocking?

      No way. Just another new normal Sunday in Oakland.

      So put your alarm clock back on snooze and get some extra sleep.

  15. As a CMBS credit investor, you get a pit in your stomach because it’s just a massive loss.

    Well I certainly hope no banks, pension funds, or insurance companies had invested in these CMBS. Or if they did, hopefully the accounting rules don’t require them to recognize the losses, so they can continue to extend and pretend that everything’s fine.

  16. Southern Poverty Law Center.

    Anti Defamation League.

    No further comment, just #Noticing and #Naming.

  17. What’s with blue mayors and governors asking their citizens to take the invaders into their homes? Surely they know that such a request will fall flat on its face. Is this a prelude to them trying to FORCE people to house the invaders?

  18. Washington Post (via Archive) — Library of Congress launches covid oral history project (1/25/2024):

    “The Library of Congress and StoryCorps announced this week that they have created a website for people to record for posterity their experiences with the covid-19 pandemic.

    Stories, or interviews with others who were touched by the pandemic, can be recorded online. They will be preserved in the Library’s American Folklife Center and made accessible at archive.StoryCorps.org.

    “Our goal for the COVID-19 Archive Activation page is to honor those who experienced this tumultuous moment in our nation’s history, commemorate those who were lost … and to educate future generations about what life was like during” the pandemic, Nicole Saylor, director of the American Folklife Center, said in a statement.

    “We are particularly interested in doing this work through people’s stories, as storytelling is a crucial medium of communication,” she said.
    Librarian of Congress Carla Hayden said in the statement: “Recording the voices and stories of Americans’ experiences with the COVID-19 pandemic for our national collections will … ensure these stories will not be forgotten.”

    https://archive.is/6VnBp

    Voices and stories?

    Will this include audio of the dying moans of people forcibly intubated and denied Ivermectin?

    And will it conclude with audio of Anthony Fauci being sentenced to death? Let’s hope so 🤟

  21. In the late 70s my High School band would play this song in the fourth quarter when we were blowing the other team out which happened a lot my senior year. A few of us starting linemen who had been pulled from the game so the second team could get some mop up playing time would stand back by the bench and pretend we were talking football. Actually we were using our front row seating to watch the cheerleaders who were all girls and mostly all hot (unlike today where they seem to have some cheerleaders who look like linemen) perform their dance to this tune. To this day when I hear that song those memories still bring a smile to my face.

    https://youtu.be/WhF6Yzws5PU?si=6ASUQyHZME7A9ahE

  22. Bidenomics in action:

    DENVER — The CEO of REI announced the company will lay off hundreds of workers once again.

    REI CEO Eric Artz said in a letter Thursday that the company will reduce its workforce by 357 people, including 200 people at headquarters, six in sales and customer service, 30 in experiences and 121 in its distribution centers.

  24. Squatters turn Beverly Hills mansion into party house
    KTLA 5
    1 day ago

    Squatters have turned an unoccupied Beverly Hills mansion into a party house, hosting rowdy nightly parties and even charging admission to partygoers. Authorities have failed to shut down the gatherings as the squatters claim they are legitimate tenants. Neighbors in the area told KTLA the parties are disruptive, keeping residents up all night, while leaving them fearing for their safety.

    The neighborhood is home to several high-profile celebrities including Lebron James, John Legend, Seth McFarlane and more. Jeff Bezos, Steve Wynn and Ron Burkle all live within half a mile of the home. Neighbors said the police are often called to the home, as vehicles block the surrounding streets and arrests for assault, fires and more have been made. The squatters reportedly charged partygoers a $75 entry fee.

    https://www.youtube.com/watch?v=yN_XogCn5hU

    3 minutes. A lot more detail on this FB.

    4. Business
      Inflation slowed further in December as an economic ‘soft landing’ moves into sharper focus
      By CHRISTOPHER RUGABER
      Updated 10:08 AM CST, January 26, 2024

      WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge cooled further last month even as the economy kept growing briskly, a trend sure to be welcomed at the White House as President Joe Biden seeks re-election in a race that could pivot on his economic stewardship.

      Friday’s government report showed that prices rose just 0.2% from November to December, a pace consistent with pre-pandemic levels and barely above the Fed’s 2% annual target. Measured from a year earlier, prices increased 2.6%.

      Excluding volatile food and energy costs, so-called “core” prices rose just 0.2% from month to month and 2.9% from a year earlier — the smallest such rise since March 2021. Economists consider core prices a better gauge of the likely path of inflation.

      The latest data suggests that the economy is achieving an elusive“ soft landing,” in which inflation falls back to the Fed’s target without a recession. That outcome could make it easier for the Fed to consider cutting its key interest rate, which it raised 11 times since March 2022 to attack inflation. Higher interest rates have throttled home sales by raising the cost of borrowing. Businesses have also chafed under the higher borrowing costs.
      …
      https://apnews.com/article/inflation-prices-election-federal-reserve-rates-economy-8cdc8d09320bdaf6101033a9c13957cf

    1. Yield Curve

      Here’s the latest 10-2 spread. Typically, the spread goes negative for a period and then out of the red prior to recessions, and is thus considered a reliable leading indicator for recessions. The lead time for recessions is quite a range – after going negative, recessions have begun anywhere from 16 to 62 weeks later. We also can see a false positive in 1998 where the spread went negative for a short period. For the 2009 recession, the spread went negative a couple of different times before rising.

      If we use the first negative spread date as our starting point, the average number of weeks leading up to a recession is 37, or about nine months. If we use the last positive spread date after being negative before a recession, the average is 17 weeks, or 4.25 months and the median is 14 weeks, or 3.5 months.
      …
      https://www.advisorperspectives.com/dshort/updates/2024/01/26/treasury-yields-snapshot-january-26-2024

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