Several readers have made inquiries to me asking…”when will the lenders take over the building?” This is, of course, a dicey subject. Of all the topics discussed on the blog, it falls on the far right of the speculation spectrum, since I have had no contact with any of them, nor has any reader, to my knowledge. But I think it would be fair to say that many of us would have predicted that they would have already done so, and we would have been dead wrong.
If I put myself in the shoes of an investor today, I am telling the Vue Charlotte this. Show me the pipeline. Show me who the top prospects are; the ones on the fence; and the ones that are least likely (due to finances, etc.) I look at the list and I tell the Vue: ok, show me you can close the top prospects, and if you do that, we’ll give you some time to leverage that momentum to try and close some more.
As an investor, I don’t want this building any more than MCL does. I am not in the building management business, and neither is MCL. As an investor, I lent the money for a nice return on my investment. MCL built it to sell out so they could take their profits and go build another one. Holding a half-empty building was not in either of our plans.
But as the saying goes, we are where we are. So what to do? At the moment, it seems the strategy is to try and close as many of the contracts as is possible at full price in an amicable manner. Dispense some lawsuits to demonstrate to the buyers we are serious about them honoring their contracts and expect them to do so. And see where we are after a quarter or two.
Well, now enters GuaranteedRate, an aggressive lender that will no doubt be the best hope for the investors and MCL to get the top and top middle prospects closed. With any luck, they will get some new buyers off the street. The good fortune of stumbling onto one early on (the 1M dollar sale of 3307) was a gift from the Gods above. It is a true comp and now will find its way into every appraisal done on those top floors.
Unfortunately the reality is we have 11 officially closed in the public records, and supposedly a good dozen or so on the way. Let’s say best case this gets us to 25 of the 400 units. How will we then get the next 25 sold?
At some point, the sales could slow, and the law of economics will kick in: to increase demand, prices will need to fall. MCL has stood firm on the price, and my guess is that they are contractually bound to do so. They most likely have no choice. But once the only option to stimulate demand is to reduce the price, this could be the time that the investors take over. Whether this will be next week, next year, or ever, remains to be seen. At present, the fate of the Vue is in the hands of the sales team. As I have said previously, all things considered, as an investor, I feel like those are the most capable hands in Charlotte.
Please send your feedback to firstname.lastname@example.org. Tomorrow we will end the week with a lawsuit update.