I guess this answers my question:
http://www.oregonlive.com/business/i...taken_ove.html
But given that they haven't listed any of their units in MLS for months now, I don't see how they ever expected to avoid disaster...
Portland condo tower taken over by Australian lender
by Ryan Frank, The Oregonian
Friday July 31, 2009, 7:17 PM
Faith Cathcart/Oregonian
The two-building Waterfront Pearl project started as the river-front icon of the popular Pearl District. But after construction delays, cost overruns and slow sales, it's now owned by an Australian bank.
The Waterfront Pearl, one of four buildings featured in this year's Street of Dreams show, is the first major Portland condo project to go back to the bank since the condo craze crashed in 2007.
A subsidiary of Macquarie Group, an Australian financial firm, took over the 194-unit project this summer after the developer couldn't raise enough cash to cover cost overruns.
Developer Paul Mayer of Pemcor Development in Vancouver, B.C., tried since last year to negotiate a workout with his lenders. On other Portland condo projects, lenders and investors have stopped short of foreclosure by agreeing to take lower returns or a loss
In Mayer's case, he couldn't convince international lenders to cut a deal. So he deeded the property to the Australian bank in lieu of foreclosure. "We've resolved it as well as we could have in the circumstances for all parties," Mayer said Friday.
The Waterfront Pearl symbolizes the troubling times for real estate developers and banks. The project was marketed as an eastern extension of Portland's Pearl District with riverfront and mountain views and a dramatic water feature that wraps the ground floor.
Prices were supposed to ride the top of the market at about $500 per square foot on average. Instead, construction costs escalated, the schedule bogged with delays and sales sputtered thanks to a credit crisis and tumbling home values. The bank is now offering about 150 of the remaining units as rent-to-owns or for-sale condos.
The Home Builders Association of Metropolitan Portland, which runs the Street of Dreams show, moved this year's show to feature downtown condos because of the stalled luxury-home market.
They had planned to include some suburban homes this year, but builders couldn't lock up loans from lenders burned by the busting residential real estate market. Eric Stride, the show's operations manager, said one builder even had a buyer for a $1 million home -- modest by the show's standards -- and still couldn't get a construction loan.
The Street of Dreams starts today with nine condos in four buildings. It's billed as one of the country's first luxury home shows for condominiums.
Mayer launched the Waterfront Pearl's sales in 2005 when Portland's condo market was red hot.
Mayer's company took out a $96.8 million loan with CDPQ Mortgage Corp. of Quebec and an $18.4 million loan with Macquarie's subsidiary. His contractor, Portland's Hoffman Construction, broke ground on the two-building project in October 2005.
Problems began soon after. Crews ran into flooding from the neighboring Willamette River twice. Instead of building, they spent time pumping out the river.
By summer 2008, Mayer's company didn't have enough money to keep up with the rising costs. Hoffman Construction filed a $15.8 million construction lien on the project that July after it worked for two months without pay, according to company executives.
Hoffman halted its work between June 2008 and March, and Mayer tried to convince his two lenders to help cover the overruns. The project that started with an $85 million construction budget jumped by $10 million, or 12 percent.
Mayer thought he had negotiated solutions twice, but both fell through. Macquarie eventually bought out the other lender, paid up with Hoffman Construction and finished the water feature.
Mayer then signed the property over to Macquarie on June 30. Macquarie executives couldn't be reached Friday for comment.
Mayer said he's still trying to recover money from his architect, MCA Architects of Portland. He said the firm's construction drawings created problems during construction and he's seeking as much as $7 million in damages. The two sides are scheduled to begin mediation this fall. An executive at the architecture firm declined to comment.
The Waterfront Pearl is among a generation of condo towers that rose at the tail end of the condo boom. The projects launched when the market was still hot, but they're now languishing.
In some cases, lenders and investors have been willing to negotiate a workout plan. That's led to slashed prices in every major condo project.
Among 13 new downtown projects, there were 795 unsold condos left in the market. Of those, 18 sold in June. But the sales this year are coming at steep discount of 23 percent from the original list price, according to research by real estate brokers at Realty Trust City.
The Waterfront Pearl, according to the firm's research, has stopped its sales marketing. But at the building's sales office, a woman who declined to give her name said sales were still ongoing along with a rent-to-own program.
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