Vue Charlotte’s Debt has been Sold!

Susan Stabley has just posted in the Charlotte Business Journal Real Estate Roundup blog that Northwood Investors has purchased the debt  both junior and senior for 100M.

This is a breaking story and I am sure we’ll find out more in the coming days, including the significance of this transaction on the future of MCL and the Vue Charlotte.  MCL is under a confidentiality agreement according to the article so is unable to comment.

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MCL in Default

The Charlotte Business Journal is reporting that the Vue is in Default on its 4 million dollar loan for the Vue.  R.J. Griffin (renamed Dunn Souteast), the contractor, has secured a court judgement according to the reporter, Susan Stabley.   The site is pay only, so this is all we can report so far since we are in default of our Charlotte Business Journal subscription (not really!)

I believe this is a huge setback for the current owners, several of which I have come to know over this period and are huge fans of their condos. What comes next we’ll have to see as we get more reporting in the coming days.

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The VUE Denies It’s Moving To Rentals

The Vue Charlotte is now denying that their mortgage is in default and that they are moving to rentals. Looks like there are some facts to sort out and that the drama of the Vue will just not die.

The Charlotte Business Journal is now also in the game, reporting in an article entitled ‘Vue Lender Marketing Loan’ that a company, HFF, began marketing the loan last week and there is interest by investors both in Charlotte and Miami.

Based upon what I have read in the press so far, and sources that have contacted me, I believe the Vue could be truthful in its statements that its intent is to not move to rentals, hoping that whomever buys these loans is able to sell the units as condos at certain (lower) prices. Those prices would obviously have to be significantly lower than they are now given that we haven’t seen a sale at the Vue in quite some time.   This would almost certainly require a good number of folks who have deposits at the Vue agreeing to jump back in and close, something the courts determined awhile back they are not required to do but may elect to do if able to buy closer to market prices. The price points would then have to be attractive enough to draw in many new buyers as well.

Is this possible? I simply don’t know. Is what I am saying above correct? I can’t say that either. It is just my best guess based upon what I know so far.

The Vue’s denial can be found here in the article entitled: Vue Developer Says Condo Won’t Turn Into Rentals.

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Breaking News on the Vue

Rushing this post out as the Charlotte Observer has just posted an article on the Vue Charlotte entitled: Charlotte’s Vue Condos Turning to Rentals?

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A Discounted Sale At the Vue

In today’s Charlotte Business Journal, there is a sale listed for unit 2907 for $390,000. Unit 2607, the same floor plan, sold for $550,000 to a pre-sales buyer earlier in the year. The square footage listed is 1170. This would be $333.00 per foot.

Several self-described vultures have mentioned they have been waiting to swoop in when the prices came down. Maybe it’s time for them to get a closer look?

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$4,000,000 Judgment Against MCL

The Charlotte Business Journal had this posting under Judgments Granted in today’s edition. The order is : plaintiff name, defendant name, amount of judgment, prevailing party, case number and recording date.

Dunn Southeast Inc./RJ Griffin & Co vs. MCL Chicago Homes Inc./MCL Companies of Chicago Inc./Daniel E. McLean, (address not shown), $4,000,000, plaintiff, case #11 CVS 021963, 12/08/11.

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The Vue Looking Back

I thought it would be interesting to look back to December of last year to see how things have progressed over a 1 year span. It was in December when the Vue initiated its lawsuits against 4 buyers, and it caused quite an irate reaction from our readers. Here is a re-posting by one of them, from the post entitled: A Buyer’s Thoughts on the Vue Charlotte Lawsuits.

I am not surprised that the Vue has taken the position to take legal action with pre-sale buyers that have decided not to close based on the arm’s length approach that they have chosen to take thus far. These buyers have committed significant capital to a 400+ Unit project that has had only 4-5 closings since September 2010. In my estimate, when pre-sale buyers review their options, closing on the unit appears to be the worst of the worst. The representatives of the VUE and its lenders have shown zero willingness in working with pre sale buyers to make these closings occur at a more rapid pace.

I expected by this point that the Vue and its lenders would have agreed to a loss sharing provision which would allow pre-sale buyers to close at today’s market value price, which would allow many more folks to be able to close. In exchange for this, pre sale buyers would likely agree to equity sharing which allows the Vue Lenders to participate in the future appreciation of the unit once the pre sale buyer decides to sell the unit. If the unit sells for $50K more than the pre sale buyer paid, then the bank would receive $25k. This equity contribution along with the 10-15% deposit the pre sale buyers have previously made would likely come close to covering most of the original contract price of the unit.

Instead of using any form of financial creativity or having a steady stream of communication coming from the Vue and its staff, pre sale buyers are forced to deal with a figure that is less transparent than the Wizard of Oz who operates behind a big curtain. The big question is whether or not the Vue is pursuing pre sale buyers that have made no attempt to close versus those that have attempted to close and were declined by their lender (or both). If they are going after those that have made no attempt to close, then the Vue has made the decision that they will recover enough in assets to cover their legal fees. For those that have attempted to close, but have been declined by their lender, I would speculate that the Vue would have a difficult time convincing all 12 members of a jury that they should be held liable especially given that the buyer has lost a significant deposit. Either way, lawsuits like these scare away potential buyers and will likely not fill up the units any faster.

The post was followed by this commentary from me:

The blog has been all about negotiation, compromise, and fairness. The above is one of the more articulate statements of a solution that should work for all parties. I can only plead with the Vue to work with us and remove these lawsuits and pursue a path that gives the building a chance to succeed.

This month, as we write, the Vue has recently lost their appeal and has a mere 18 residents in a building of over 400 units.  We all are waiting to see what will happen next.

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