The blog has established a very healthy and helpful communication with what used to be our sister project in Orlando until ownership changed. I want to make it clear there is now no connection between the 2. MCL owns the Vue Charlotte, and has never had any connection with the Vue at Lake Eola.
That being said, we know the buildings are similar in many ways and so far the fates of the two have followed relatively the same course. Actually, the Vue in Orlando closed many more pre-sales than has Charlotte, and still had to auction off many of their units.
How is the building doing today and what insights might they share so we can benefit here in Charlotte? Cristian Michaels has once again provided an informative letter and I am sharing it in full below. Thank you Cristian for your insights!
Glad to hear things are moving along, sorry to hear its taking so long. It unfortunately tends to be part of the process. I would make several comments to the email below;
In 2010 a new class of investor was created in FL, known as a successor developer. We are treated very differently that a bulk investor. That being said it has paved the way for groups like ourselves to come in and assume a developers position without the liability of
structural claims for defects. Secondly, the VUE Orlando played out in a much less desirable way. If the 8 lenders had just sat around a table and realized all they needed to do was adjust release prices 20%, they all would have benefited far greater. Instead they all fought over any sales proceeds, forced the developer into BK, and the jugge ordered an auction and then liquidated the building to settle the debts. We then acquired the building for 20 cents on each of the banks dollars.
We are looking at other acquisitions all over the country and seeing lenders evolve in their strategy. They are getting wise to the errors of the past ways and in some cases foreclosing and selling the asset themselves. We see this often in markets like Miami and Ft. Lauderdale. Other times they write off the loss and dump the building. either way a critical component is end loan financing for buyers coming in. If lenders wont write mortgages in the building because only 10-15% are closed, there will be great hurdles to overcome.
As for VUE Orlando, we closed in May of 2010, refreshed the building over the first four months of ownership, attained FHA and Fannie Mae approval. We then began trade shows and out of market advertising. At this point, we are selling 5-6 per month. We have closed 21 sales and have 17 more pending. Our on site team aggressively sells a lifestyle, not just a condo and it has allowed us to command a premium for our product within our market. Where our market was $200 psf middle of last year, we are attaining $235-$265 psf all day long. These sales prices are not loaded with concessions either. The other benefit was two large competitors going lease up.
Now there are two unique buyer profiles, second home cash buyers from Canada and domestic buyers that see a value in the FHA and can get in with 3.5% down. The owners in the building that were original buyers seem to have really embraced us as a partner in the project vs a developer that was here to make money. We are very inclusive in there thoughts and ideas for the continual improvement of the lifestyle here at VUE Orlando. We have only leased several of the penthouses and the premium 3/3 units, less than 8 in total. Those rentals on those few units actually covers the condo fees and electric on the vacant unsold residences.
We have gotten creative on how to package the product. We install closet built ins, back splashes, lighting, and even window treatments to assist the buyer in a seamless transaction. I have even renovated several 3/3’s for incoming buyers that wanted structural changes made.
I know the individual in the email referenced a condo metropolis site, but all broker websites load directly from our MLS systems each night. The disparity in numbers is the handful of short sales and REO’s in our tower. They are minimal, less than 10% of the overall population and don’t compete with us. In fact many of them are lingering from a year ago prior to our purchase. Now lenders evaluate the low short sale offers
and see what we are selling for then reject the low offers. It will be a process to flush them through, but eventually they will trade slightly less than our traditional sales.
That being said, things are incredible in Orlando now. We are watching your project and eagerly awaiting a resolution from your lender. We would love to turn the project around like we have already done at VUE Orlando.
Keep me posted.
Cristian Michaels, President
Condo Developer, LLC
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VUE at Lake Eola