Quote:
Originally Posted by solstadwest
I do not believe that the cosmo project will carry over well to the business model that they have in place. As they state they have 1.5 years until closing on all the units. I do not see a wild swing in the lending habits of banks in this short time period for las vegas condos let alone Hotel/Condo projects. (TRUMP only has a whopping total of some 200 closings out of a pool of some 1200). Indeed if DDB wanted to find a bank "to do" the financing they should have no further to look than themselves-- after all they own the Cosmo and should have the best interest of the owners ( of their units) in mind. Do they not have some of the best financial prowess on the planet now. Why would they want to dish that off to a lesser lender? Because they do not want the risk? Or do they see 80 some percent of the unit owners forclosing and walking away from their deposits its happening at TRUMP. For those unit owners just try calling Cosmo and ask for your deposit back...
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Yo Solstad,
I am not sure what business model you are referring to. I have heard numbers ranging from 1 to 1.4 billion dollars in contracted sales upon close of all escrows. There is no doubt in my mind many of those who purchased at Cosmo were folks looking to make a fast buck in what appeared to be a rising market. There were also many who purchased at the end of the Sales period.
Their business model at the time was to raise the price on a bank of units, at given intervals, until a threshold or top dollar value was reached. Those who got in earliest benefited the most. Prices went up significantly and the only thing I ever heard after the foreclosure process was that Eichner sold units too cheaply and the most desirable units the most cheaply. Time will tell if that was a correct analysis. That said, Mr. Eichner's vision may prove very valuable to those of us who can close and meet the credit requirements of specific lenders willing to do business on a mixed use facility in Vegas.
That said, the new owner/bank is under NO obligation to bail out anyone who does not now or ever had the credit to actually close on a piece of real estate that did not significantly appreciate at the close of escrow. The fact they are apparently attempting to line up potential lenders, as NO one bank or institution is going to lend on over a billion dollars worth of mixed use sales in one complex, is actually a very good and well thought out business model and speaks volumes about Deutche's foresight as I am guessing we are probably closer to 2 years away from actually closing escrows. This may allow enough time for the markets to at least partially sort things out and provide for possibly lower interest rates to those who can qualify. Though Deutche is not a home loan type institution and probably does not have the infrastructure for it I wonder if it would make sense for them to take 33% or around 400 million of the better units and provide loans to the most qualified individuals thus setting up comps for the complex. I doubt it would happen but it was just a thought.
For those who signed on the dotted line, placing their 20% at risk without the income to qualify for a loan at a fixed rate, hoping for a sub prime mortgage to carry them through, then those investors made a decision that may cost them those deposit monies. I am sorry that is the case but remember that is the nature of an investment. Sometimes you win and sometimes you lose. I never saw on the contracts the unit purchaser is guaranteed to make money or assured of getting some kind of loan, though I did continually hear the sales folks tell us how much money we would all make, but none the less if it is not in the contract it is just not fact.
Now for those of us who can hopefully close escrow, this project in NO WAY even remotely resembles Trump. I relate Trump to a lovely home noted by a real estate agent in their brochure as Beverly Hills "Adjacent" and the Cosmo as the true Beverly Hills or as Eichner put it the "Manhattan" of Las Vegas.
Deutche is making some tough business decisions here. Only those on the inside actually know what is going on so I will not attempt to second guess the results but the price per square foot, though outlandishly high, may still be some of the lowest(Compared to City Center) for a complex of this location and stature. That said, this project was slated to cost around 1.5 billion dollars. The real cost appears to be closer to 4 billion. The price I am paying for my units has NOT changed as the cost of the project went up almost 3 fold. My locations and views have NOT changed as so far none have decided to build in front (To the North) of us. Those of us with North facing units still have a unparalleled view of the Belagio fountains and the entire North strip. I have NO problems with Cosmo so far. Yes it has taken longer than expected but the only one really paying for that so far has been Eichner and his investors. We, the unit owners may benefit from freedom from this economic down turn and be rewarded with lower interest rates in a couple of years. Time will tell.
Back to the Business model, until I see the final branding of this complex I will reserve judgment. The hiring of Related Cos. brings what I hope is a welcome face to the project especially since their past business relations include the W brand. I have heard more rumors the Hilton has been investigating the project. We must remember Eichner and Cosmo brought NO real validity as a world wide brand for either gaming or hotels like a W will. Even Hyatt to me was not the type of name this project will require. I hope the project owners are successful in actually bringing a managing partner into the project that brings a level of trendiness and sophistication demanded by this location and overall cost of the project. If the branding and amenities should bring in some high profile clientèle from here and around the world, the pools and bars bring in the beautiful women to see and be seen and the management really understands what the customer service and value provided by the OLD VEGAS was all about, then perhaps we have a winner, possibly the only winner in Vegas. Should that announcement be forthcoming I will wait and see how the actual business model, which is unknown in its entirety at this time, of Deutche, etal. plays out. Besides, at this point I really have no choice.
Thats just my opinion.
FOD
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