Monday, December 22, 2008

One Carter Bail Out Unlikely --- At Least From Dubai


As was noted in previous articles, the Dubai (United Arab Emirates) based ownership of John Laing Homes - the international developer known as Emaar - now finds itself saddled with a bit of financial dead wood right here in our little city. As erstwhile interest holder in the troubled One Carter Estates property, Emaar now finds itself facing the possibility of having to swallow this highly leveraged piece of muddy real estate. A holding that they couldn't even give away at auction last week. More reflections of the banking and real estate crisis here in the United States.

But if you think things are bad here, check out what is going on in Dubai. This from the Qatar based Gulf Times:

Banks that financed Dubai's six-year real estate boom now face the unprecedented challenge of foreclosing on bad mortgages as over-stretched borrowers, who had hoped to cash-in on soaring property prices, default ... Market financing has evaporated, sales have slumped, developers and brokers are cutting jobs, while prices in some areas are reported to have fallen sharply. 

You need to think of Dubai as the Switzerland of the Arab world. It is where all the most influential banks are located.

What this means for us is that we could be looking at an orphan property at One Carter. With little financial incentive to further invest in needed infrastructure construction, and with the economy in Dubai making raising the capital needed to go forward with this project difficult, what is to prevent them from just packing up and walking away?

The consequences of one of the worst blunders in Sierra Madre history continue to show no signs of abating. What we are possibly faced with here is an abandoned property, one that poses a significant threat for mud and landslide damage should severe storms hit this rainy season. Could it be that the cost of building the retaining walls and the other things needed to fend off disaster could end up falling upon the City of Sierra Madre? And is that really what the rumored bonds were for?

The Sierra Madre City Council - Class of 2004. The gift that just keeps on giving.

9 comments:

  1. This was similar to the TV special, I believe was run last week on CNN.
    The Sierra Madre City Council-Class of 2004 should hang their heads in shame. Torres, Stockley, Buchanan and Joffe. Maurer voted against it.
    Thank God we have Zimmerman, Watts and MacGillivray on our council now. They will do everything in their power to protect the city and not let something like this happen again.
    To TommyAnn, Teryl, Jaymi, Irene, Melissa and others who live up there near that mess......we sure are sorry. Hang in there....at least Dorn Platz is finished, now looks like Dubai is out of the picture.
    We should all pray that possibly the Mountain Conservancy can acquire that land. We can have a community volunteer effort to replant trees and plants up there, it is a tragic picture of what greed and corruption looks like at the present time.

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  2. Little bit of luck and the whole bloody mess could fall right into the hands of Sierra Madre. Funny how things all work out, eh?

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  3. Let's hope.

    I had heard a similar comment in a completely different context the other day. I was chatting with a friend who is an architect working in England for an international architecture firm. I dropped a comment about Dubai and got an immediate and unequivocal response--Dubai's bust.

    My jaw dropped and the explanation was quite simple: They've run out of oil, but that's not the problem. They knew they were going to run out of oil (starting about 30 years ago), so they positioned themselves to do something different--a vacation spot, a destination for high-life fun, and financial hot spot. Well, all those high rises that have been depicted in all the email pictures have been sold to European "investors" or owners and subject to mortgages--same as everywhere else. Well, when the s*^% hit the fan, the mortgages went south and they've been or are being foreclosed. Now envision Dubai as a ghost town and you'll be getting a more realistic picture of the current situation. And so little old Sierra Madre isn't going to make much of a blip on their screen--they have much bigger fish to fry.

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  4. Fascinating information, roia!
    There has been a lot of speculation that the Dubai people are fixing to buy Santa Anita racetrack. We heard this from a good source, an Englishman who works for the Dubai people in racing.
    Now, I don't believe a word of this. No way they buy Santa Anita or One Carter.
    I think the San Manuel Indians are planning on getting Santa Anita.....they have been running expensive ads on every TV station continueously.
    Not to promote their Casino in Riverside, Co. but to promte themselves as self reliant good citizens who provide many benefits to Calif.
    Why? A deal going with Gov. Arnold?
    It's possible.
    Just so they don't claim One Carter as old Indian land and put a casino up there....LOL
    Merry Christmas everyone.

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  5. At least if the San Manuel people get in they'll keep it as a horse track. Much better than having it bulldozed to make expansion room for that cheesy damn shopping mall.

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  6. ROIA - Thanks for the insight. The two-bit visionaries who were running this town in 2004 could never have imagined that not only would the big money people who so dazzled them be broke in 4 years, but what their actions were really bequeathing this town was nothing more than a denuded and mudslide prone hillside.

    What goes around, as they say.

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  7. Barry,
    I think if the San Manuel people buy Santa Anita (Stronach is broke)Gov. Schwartzenegger will have to allow slots at Santa Anita, which will mean they will have to allow slots at all the California racetracks. Hollywood Park is currently owned by Bay Meadows Reality Co. (developers). They made a deal to buy the property from Churchill Downs Co. to develop it into a huge mall, which the city of Inglewood wanted. However, the deal had a stipulation that if they approved slots in Calif.....they (Churchill Downs) would buy back the property. As incredible as it seems, Hollywood Park could stay a racetrack.
    Every TV channel has the San Manuel commercials running about every hour.
    They are programming the public to accept slot machine and casino gambling in California.
    This is just my opinion and I could sure be wrong, but why else would the San Manuel people be running these ads? They mention nothing of their casino.

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  8. Emaar seems to be one of the worst hit developers in Dubai. They are withdrawing sponsorship from golf tournaments and many other things. Its seems liquidity is something that's really troubling them.

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  9. Money is not there in the market and the problem with Dubai is that it is still quite dependent on oil revenues for running its economy. Now what happens when crude oil touches a high of $147 and then dips to the current level of $36 a barrel. Dubai is facing huge financial constraints.

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