daveto
Active Member
Seems reasonable to me. Were you thinking it was higher or lower?
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Baby, we got a bubble!?
- Thread starter simuls
- Start date
Seems reasonable to me. Were you thinking it was higher or lower?
redfirm
Active Member
First number (16%) is higher than what I've expected. Assuming the same % applies to most of the recent record breaking years ... it's just not good.
cdr108
Senior Member
could everyone starting pasting the full article as the G&M has started going to a fee-structure for online .
thanks
urbandreamer
recession proof
^Wouldn't that break your contract with your subscription? It's not that expensive is it?
interested
Senior Member
Inflation is currently 1.2% and anticipated to be 1.1% when the actual Oct 2011 to Oct 2012 comes in. Still daveto's point is well taken. Prices have flattened and barring a drastic change..."the trend is not your friend" when it comes to pricing at this point.
Related to condos, not sure if posted but just updating the past re Trump there is an article in the Toronto Star yesterday of now the developer going after 8 individuals who are refusing to close with legal action. I wonder if this is a trend of what we may see at least in the condo market in larger scale in the next couple of years as prices continue to drop and individuals have purchased units at much higher price/sq.ft. to rent, especially if interest rates do climb up.
http://www.thestar.com/business/art...tled-investors-to-close-deals-they-now-regret
Trump Tower developer suing 7 disgruntled investors to close deals they now regret
Published on Monday November 19, 2012
Share on twitter Share on facebook
Aaron Harris For The Toronto Star Javad Heydary, centre, leads an eight-lawyer team including Min Kim, left, and Mitch Wine, right, who have been looking at the Trump deals on behalf of some investors.
Image
By Susan Pigg Business Reporter
79 Comments
Developers of Toronto’s Trump International Hotel & Tower have launched lawsuits against seven investors in an effort to force them to close on deals for condo-hotel suites some claim haven’t turned out to be the Hollywood gold buyers were expecting.
The legal move by Talon International Inc. comes at the same time that a London, Ont. doctor is seeking $750,000 in damages for “misrepresentation,†unless he can get back deposits on the hotel suite he bought in the ill-fated project back in 2009.
The court wrangling is just the latest round of problems to curse the celebrity hotel and condo project at Bay and Adelaide Sts.
Dozens of purchasers of suites in the 65-storey luxury hotel are now trying to get deposits back and renege on final payments averaging over $500,000.
Other buyers, some too frightened of the legal ramifications to walk away from deals penned up to seven years ago, say they are finding themselves in a crippling Catch-22 — unable to sell the units or secure mortgages on balances due to Talon Nov. 29.
“One mortgage company asked me, ‘How could I give you a mortgage on a property that is losing money every single day?†said one devastated buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and owes $750,000 at month’s end.
“It’s very scary,†says the GTA resident, one of about a dozen investors who spoke to The Star on condition their names not be used.
Most were caught up in the get-rich-quick mentality of Toronto’s booming condo market and intended to flip the units or use them to generate retirement income.
Talon has been facing an escalating buyer revolt since last February as the glitzy Trump Hotel set to open and buyers found out that maintenance fees, property taxes and other incidentals on the project’s 276 hotel-condo units had skyrocketed from Talon’s earlier projections.
Emergency doctor Ganesh Ram alleges in his lawsuit that his costs jumped 40 per cent, with property taxes alone (the hotel-condos are considered commercial rather than residential units) now at $30,000 a year. While revenues from the hotel were meant to more than offset those kind of costs, buyers say they’ve been told hotel occupancy is running anywhere from 10 to 50 per cent and room rates are averaging about $300 per night instead of the $600 and up Talon had originally touted.
Based on the startling new numbers, buyers have alerted Talon they plan to rescind their deals, citing the fee hikes as a “material change†under the Condominium Act.
Talon’s lawsuits, filed in Newmarket’s Ontario Superior Court of Justice in the summer, are seeking a declaration from the court that they aren’t a material change and that deals must stand.
Talon refused to discuss details of the lawsuits. None of the buyers named in the suits would speak publicly.
“Purchasers that entered into agreements of purchase and sale with Talon are not amateurs. The purchasers made these commercial investments in the light of day and presumably on the advice of their legal counsel,†Talon told The Star in an email through its public relations firm.
“We have full confidence in the court’s wisdom to interpret and enforce the terms and conditions of the agreements that were entered into by those few purchasers which have chosen to resile from their binding obligations to Talon.â€
While domestic and international investors have largely fuelled the condo boom since 2007 — buying up units and renting them out — the Talon/Trump project is very different. It has 379 suites, some 118 of them residential condos, the other 261 being hotel-condos that go into a rental pool.
Owners of those hotel suites pay commercial, rather than residential taxes, “common element†and other fees, including $87 every night there is someone sleeping in their bed. According to financial estimates in online promotional material, graced by The Donald’s smiling face, those costs would be more than offset by Trump Tower’s revenues.
Toronto lawyer Javad Heydary has been advising eight Korean purchasers and has been contacted by representatives of more than 40 other buyers seeking to rescind offers. He’s had a team of eight lawyers examining the deals.
What Heydary found came as a shock, especially to some buyers who readily admit they were so blinded by the flash and cash of Donald Trump that they didn’t do proper due diligence: Buyers weren’t purchasing so much a condo as a share in a high-end hotel that, so far at least, is losing money.
Some buyers are sophisticated investors. But many others are hard-working immigrants who just want their life savings back — 20 per cent deposits now sitting in trust and due to be released to Talon on closing.
“Everybody on their own or through advisors — financial advisors, real estate brokers or pension administrators — heard about this opportunity and was attracted because of the name Trump,â says Heydary.
“They were not only buying into what they thought was a good investment, they were buying a piece of Hollywood.â€
Related to condos, not sure if posted but just updating the past re Trump there is an article in the Toronto Star yesterday of now the developer going after 8 individuals who are refusing to close with legal action. I wonder if this is a trend of what we may see at least in the condo market in larger scale in the next couple of years as prices continue to drop and individuals have purchased units at much higher price/sq.ft. to rent, especially if interest rates do climb up.
http://www.thestar.com/business/art...tled-investors-to-close-deals-they-now-regret
Trump Tower developer suing 7 disgruntled investors to close deals they now regret
Published on Monday November 19, 2012
Share on twitter Share on facebook
Aaron Harris For The Toronto Star Javad Heydary, centre, leads an eight-lawyer team including Min Kim, left, and Mitch Wine, right, who have been looking at the Trump deals on behalf of some investors.
Image
By Susan Pigg Business Reporter
79 Comments
Developers of Toronto’s Trump International Hotel & Tower have launched lawsuits against seven investors in an effort to force them to close on deals for condo-hotel suites some claim haven’t turned out to be the Hollywood gold buyers were expecting.
The legal move by Talon International Inc. comes at the same time that a London, Ont. doctor is seeking $750,000 in damages for “misrepresentation,†unless he can get back deposits on the hotel suite he bought in the ill-fated project back in 2009.
The court wrangling is just the latest round of problems to curse the celebrity hotel and condo project at Bay and Adelaide Sts.
Dozens of purchasers of suites in the 65-storey luxury hotel are now trying to get deposits back and renege on final payments averaging over $500,000.
Other buyers, some too frightened of the legal ramifications to walk away from deals penned up to seven years ago, say they are finding themselves in a crippling Catch-22 — unable to sell the units or secure mortgages on balances due to Talon Nov. 29.
“One mortgage company asked me, ‘How could I give you a mortgage on a property that is losing money every single day?†said one devastated buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and owes $750,000 at month’s end.
“It’s very scary,†says the GTA resident, one of about a dozen investors who spoke to The Star on condition their names not be used.
Most were caught up in the get-rich-quick mentality of Toronto’s booming condo market and intended to flip the units or use them to generate retirement income.
Talon has been facing an escalating buyer revolt since last February as the glitzy Trump Hotel set to open and buyers found out that maintenance fees, property taxes and other incidentals on the project’s 276 hotel-condo units had skyrocketed from Talon’s earlier projections.
Emergency doctor Ganesh Ram alleges in his lawsuit that his costs jumped 40 per cent, with property taxes alone (the hotel-condos are considered commercial rather than residential units) now at $30,000 a year. While revenues from the hotel were meant to more than offset those kind of costs, buyers say they’ve been told hotel occupancy is running anywhere from 10 to 50 per cent and room rates are averaging about $300 per night instead of the $600 and up Talon had originally touted.
Based on the startling new numbers, buyers have alerted Talon they plan to rescind their deals, citing the fee hikes as a “material change†under the Condominium Act.
Talon’s lawsuits, filed in Newmarket’s Ontario Superior Court of Justice in the summer, are seeking a declaration from the court that they aren’t a material change and that deals must stand.
Talon refused to discuss details of the lawsuits. None of the buyers named in the suits would speak publicly.
“Purchasers that entered into agreements of purchase and sale with Talon are not amateurs. The purchasers made these commercial investments in the light of day and presumably on the advice of their legal counsel,†Talon told The Star in an email through its public relations firm.
“We have full confidence in the court’s wisdom to interpret and enforce the terms and conditions of the agreements that were entered into by those few purchasers which have chosen to resile from their binding obligations to Talon.â€
While domestic and international investors have largely fuelled the condo boom since 2007 — buying up units and renting them out — the Talon/Trump project is very different. It has 379 suites, some 118 of them residential condos, the other 261 being hotel-condos that go into a rental pool.
Owners of those hotel suites pay commercial, rather than residential taxes, “common element†and other fees, including $87 every night there is someone sleeping in their bed. According to financial estimates in online promotional material, graced by The Donald’s smiling face, those costs would be more than offset by Trump Tower’s revenues.
Toronto lawyer Javad Heydary has been advising eight Korean purchasers and has been contacted by representatives of more than 40 other buyers seeking to rescind offers. He’s had a team of eight lawyers examining the deals.
What Heydary found came as a shock, especially to some buyers who readily admit they were so blinded by the flash and cash of Donald Trump that they didn’t do proper due diligence: Buyers weren’t purchasing so much a condo as a share in a high-end hotel that, so far at least, is losing money.
Some buyers are sophisticated investors. But many others are hard-working immigrants who just want their life savings back — 20 per cent deposits now sitting in trust and due to be released to Talon on closing.
“Everybody on their own or through advisors — financial advisors, real estate brokers or pension administrators — heard about this opportunity and was attracted because of the name Trump,â says Heydary.
“They were not only buying into what they thought was a good investment, they were buying a piece of Hollywood.â€
rbt
Senior Member
These are the commercial hotel units, not the residential condos.
Investors seem to be surprised at the commercial tax rates and difficulty getting a commercial loan at a favourable (residential) rate on a brand new company which is taking losses.
Buyers might be surprised but their lawyers should have been all over that. Buying into a premium priced commercial investment in 2009 may not have been the wisest thing to do.
Last edited:
CN Tower
Banned
That's the official start of the Toronto housing correction IMO. How long & how deep it extends is anyone's guess.
rbt
Senior Member
Fair enough. I recalled reading that the inflation rate was negative for a quarter over the summer so the 2% rate seemed suspicious; so I looked it up.
Thanks for sharing the recent TREB numbers.
cdr108
Senior Member
sorry if this sounds cruel but i don't feel empathy for either party --- seller or buyers.
property taxes
the use of residential taxes for marketing of the hotel units is either deceptive or negligent - the developer should know better, and 1KW and other condo-hotel units in Toronto have been assessed as commercial so this should have been evident.
to the buyers, do your due diligence - same example as above. why would these be assessed anything but commercial?
room rates
i put that responsiblity to the developer/seller as it is their business to know if $600+ per night is accurate than the average $300 currently being received.
only way i see these as being financially feasible if the cost to buy is around $300 psf considering the higher commercial carrying costs with interest rates, property taxes, maintenance fees and low hotel occupancy rates
Riverdale Rink Rat
Senior Member
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No. Pay up or enjoy the hearsay. It's g&m's choice to exclude you if they wish.
Riverdale Rink Rat
Senior Member
Member Bio
- Joined
- Apr 29, 2008
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- 273
- Location
- Back to East York... Alas!
How am I supposed to feel sorry for a blue collar guy who takes advantage of his parents to the tune of $175k or someone who thought they were buying a 'piece of Hollywood?' Did they write sucker on their forehead before going to close the deal, too?
Hank
Active Member
I generally agree. This is exactly what 1KW and others went through, so no surprise that these units would be assessed commercially.
The problem, though (and this is a problem that has been mitigated somewhat at 1KW but still exists), is that the units in condo-hotels are assessed as standalone residential condo units (so for Trump what, $750,000 or so and up?) but taxed as hotel rooms (i.e. at the commercial rate). If Trump was a regular hotel it would pay commercial taxes sure, but the total assessed value of the hotel would be significantly less than the sum of the currently assessed values for all the individual condo units. 1KW (and probably others, although I only have experience with 1KW) went through a long (LONG) fight to have the assessments lowered to be more in line with what the units would actually be "worth" if they were really just rooms in a hotel and it reduced the assessments quite a bit (not low enough to bring it actually in line with comparable hotels, but a lot lower than it was).
It seems like Trump is still at the beginning of this road. Hopefully it's not as hard for them now that the groundwork's already been laid.
interested
Senior Member
I am not so sure daveto that this last assumption is totally correct. Given that there are sales in relatively new buildings, and that overall the past few years condo sizes have been shrinking, I think it may be somewhat correct though clearly not to the same degree as if we were just looking at new construction and assignments.
interested
Senior Member
^^^
To the talk about Trump and sympathy for the buyers/developer/marketing people and I emphasize I am not a lawyer:
I agree that it is unreasonable that the sales people would suggest figures / information they knew to be incorrect but this would have to be proven as deliberate misrepresentation. I am sure they would argue that they suggested getting legal/accounting/financial advice from their advisors and those who admit they did not do their due diligence I would think will have a major problem.
Also, I am sure that perhaps it will be reasonably argued that $500-600 for 5 star room rates could be expected / anticipated even if not achieved. I don't know but I am guessing that in the marketing material there was a disclaimer stating quite clearly that these were "projections" and furthermore probably something in the contracts stating that "verbal representations" are not to be relied upon and that in cases of disagreement, the written contract shall reign supreme. Also, I am sure they were told to get their own "investment advice".
That said, if individuals were greedy and sought to profit by buying the "Trump" name, and that did not work out, while I feel sorry for them they have brought it on themselves to a major degree. If prices were now $2 million instead of $1 million, would they be complaining.....no...in fact probably upset that they did not each buy 2 more. You can't have it both ways.
However, I do have sympathy for people in that the developer/marketing teams spend Millions to give these illusions and have slick campaigns and it is all designed to lure in individuals who are no where near as sophisticated as the teams marketing to them in most cases.
Unfortunately it can often take a bad experience until one understands the "reality" of these situations which is what I suspect a number of these investors find themselves in.
To the talk about Trump and sympathy for the buyers/developer/marketing people and I emphasize I am not a lawyer:
I agree that it is unreasonable that the sales people would suggest figures / information they knew to be incorrect but this would have to be proven as deliberate misrepresentation. I am sure they would argue that they suggested getting legal/accounting/financial advice from their advisors and those who admit they did not do their due diligence I would think will have a major problem.
Also, I am sure that perhaps it will be reasonably argued that $500-600 for 5 star room rates could be expected / anticipated even if not achieved. I don't know but I am guessing that in the marketing material there was a disclaimer stating quite clearly that these were "projections" and furthermore probably something in the contracts stating that "verbal representations" are not to be relied upon and that in cases of disagreement, the written contract shall reign supreme. Also, I am sure they were told to get their own "investment advice".
That said, if individuals were greedy and sought to profit by buying the "Trump" name, and that did not work out, while I feel sorry for them they have brought it on themselves to a major degree. If prices were now $2 million instead of $1 million, would they be complaining.....no...in fact probably upset that they did not each buy 2 more. You can't have it both ways.
However, I do have sympathy for people in that the developer/marketing teams spend Millions to give these illusions and have slick campaigns and it is all designed to lure in individuals who are no where near as sophisticated as the teams marketing to them in most cases.
Unfortunately it can often take a bad experience until one understands the "reality" of these situations which is what I suspect a number of these investors find themselves in.
interested
Senior Member
^^^
From Jamie Johnson, a tweet he posted:
Remax condos plus:
Deals falling thru. Not just conditional ones but also firm deals. Anyone else seeing that? Lawyers get paid but not Realtors .... [November 19th 2012]
I wonder if this is more fuel to confirm the deteriorating real estate market that some on this forum suspect.
From Jamie Johnson, a tweet he posted:
Remax condos plus:
Deals falling thru. Not just conditional ones but also firm deals. Anyone else seeing that? Lawyers get paid but not Realtors .... [November 19th 2012]
I wonder if this is more fuel to confirm the deteriorating real estate market that some on this forum suspect.