There's the other shoe...Trump wants a loan extension

So, maybe the retail sale is a backup plan. Or maybe it is a potential condition of a loan extension. Who knows?

What we do know, according to Crain's, is that The Donald has asked for a loan extension. And I expect he'll get it. We all know where the condo market is and right now things are not pretty. Often there are conditions on a loan extension such as a change in the debt service coverage ratio, different interest, selling chunks of the project, more equity...you name it. But this is a high profile project and I'd be stunned to see the banks say no. Whether there will be some heavy negotiating remains to be seen. Have fun, all you lawyers!

P.S. Donald Jr. says the hotel's doing great; and, by the way, if you buy there it means you get Rex Grossman for a neighbor (nothing personal, Rex, but no thanks).

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Deal snags - the latest example

Just when you think a deal's going to close, another snag hits. This happens all the time. I know a deal that was supposed to close in June that is just going at turtle speed when it shouldn't be.

Case in point: Waterview Tower. Last month I mentioned that Teng & Associates had apparently plunked down ~$170 million in cash on the future Shangri-La Hotel and condos, but that they were confident they'd get a loan in place soon.

Enter the snag. In this case, the lender's usual carrier for trade credit insurance decides that something (either the market, or perhaps something else) makes this deal too risky to underwrite. So, it's off to Lloyd's and elsewhere to find a company willing to do the deal -- for the right price.

Let's recap. Now you are looking at a huge project at a standstill, probably no policy (or closing) in place until October, the possibility of bringing in a JV partner (which could slow things down again or speed them up if there's enough cash in the game). This is a dirt lawyer's dream -- or nightmare.

So watch for a closing in 45 days, unless there's another snag.

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Condotels = Pets.com?

Thanks to Deal Junkie for pointing this out.

The Journal had a story the other day that compares condotels to dotcoms that crashed a few years back. I took a pass a year ago on the concept. And that was not the first time either. I remember look at condotels at a resort in Scottsdale back in 2001 and again in Florida in 2005.

Why did I look? A friend was doing well with one in Orlando but that was back in the earliest of days. Something just did not seem right about the whole thing. Finally, a savvy real estate agent told be to be very careful about this, to the detriment of her commission(!)

And my spider sense may have been right this time. These are great for developers because they get the money up front which allowed them to get construction financing. Great mitigation of risk. And the management company still keeps roughly half the revenue as a management fee, so they make out all right too. The losers? You guessed it. All the risk of a down market is shifted on to the individual unit owners.

Will there be litigation? You betcha.

How many times do you have hear this? If it sounds too good to be true, it probably is.

The only upside? If I make some money this year and next I might be able to pick up some stuff on the cheap. That's not too good to be true.

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