Lehman’s Detroit Escape Means 90% Loss on Properties: Mortgages

[begingri]

Lehman Brothers Holdings Inc. has said it plans to be patient in selling real estate holdings four years after filing the largest U.S. bankruptcy in history. In Detroit, it’s willing to accept less than 10 cents on the dollar to get out while it can.

Lehman is selling a 251,000-square-foot [[23,000-square- meter) office property in suburban Farmington Hills. In June, the bank offered it at auction for $10 a square foot, which would have recovered less than 10 percent of the $27.5 million mortgage it extended in 2007. It’s also selling 1 Woodward Ave., a tower overlooking the city’s riverfront and border with Canada that’s 44 percent vacant.

Detroit’s metro office market is missing out on Michigan’s revival three years after the government rescued General Motors Co. [[GM) and Chrysler Group LLC amid the worst financial crisis since the 1930s. Borrowers 30 days late or more on Detroit-area office loans packaged into commercial mortgage-backed securities rose to 24 percent from 15 percent in August 2011, according to data compiled by Bloomberg, compared with 9.9 percent nationally.

“This is probably not a market where you’re going to see much growth and for that reason, it might make sense to just move on,” said Shaw Lupton, a senior real estate economist at data provider CoStar Group Inc. [[CSGP)

http://www.bloomberg.com/news/2012-0...mortgages.html

[gthomas]

Dan Gilbert is serious out here!! Other investors better jump on the wagon, I'm loving this direction. He's setting a perfect example for some of you naysayers and doubters of Detroit. Only true leaders see potential in anything and not have this mentality, like nothing can work in Detroit proper. Detroit + Gilbert = SUCCESS! I beg anyone to differ.

http://m.detroit.curbed.com/archives...odward-ave.php

[Richard]

http://m.detroit.curbed.com/archives...odward-ave.php

Dan Gilbert is serious out here!! Other investors better jump on the wagon, I'm loving this direction. He's setting a perfect example for some of you naysayers and doubters of Detroit. Only true leaders see potential in anything and not have this mentality, like nothing can work in Detroit proper. Detroit + Gilbert = SUCCESS! I beg anyone to differ..

Well if the city and state gave other investors $200 million I am sure they would be all over that ,or better yet give me $200 mil and the exclusive rights to the original street car grid and I will match it for the surrounding neighborhoods with jobs and advanced training.

[gthomas]

Sounds nice, I will do the same. Here's the difference between other investors and Gilbert, simply put...He Understands. I see investment, creative diverse workforce, driving force for residential project, local & national retail, attracting all innovative businesses, mass transit..etc. He's not pocketing his earnings, he sharing his wealth while giving you a good paying job, incentive for living, restoring historic building, & access to ANYTHING the city has offers. When I hear his name all I think of is PROGRESS!! That's the difference ...

[Honky Tonk]

Sounds nice, I will do the same. Here's the difference between other investors and Gilbert, simply put...He Understands. I see investment, creative diverse workforce, driving force for residential project, local & national retail, attracting all innovative businesses, mass transit..etc. He's not pocketing his earnings, he sharing his wealth while giving you a good paying job, incentive for living, restoring historic building, & access to ANYTHING the city has offers. When I hear his name all I think of is PROGRESS!! That's the difference ...

And today during Navy Week, Dan Gilbert will walk across the Detroit River to Canada......

[Goose]

taking investment advice regarding Detroit from Dan Gilbert is like listening to Mark Zuckerberg try and sell you Facebook stock....

[Gannon]

I wish I could remember who said this, to give proper credit, but it was brought to my attention that what Gilbert is actually doing is building a monopoly on parking. This is round one. At some point, I expect war with the Pakistanis.

But this Lehman 10% Clearance Sale is simply too good for him to pass up.

[Gannon]

Thanks Honky Tonk and Goose, needed those gut-chuckles today.

[Richard]

I wish I could remember who said this, to give proper credit, but it was brought to my attention that what Gilbert is actually doing is building a monopoly on parking. This is round one. At some point, I expect war with the Pakistanis.

But this Lehman 10% Clearance Sale is simply too good for him to pass up.

In the Crains articial it is stated "Controlling downtown parking has been a key element of Gilbert's downtown real estate acquisition plan. He owns most of the parking that serves the Woodward office corridor."

He is up to 3500 spaces now.

The building he vacated for the move downtown is also up listed by Lehman I wonder if the move had not happened if that property would have remained more marketable or desirable for acquisition because at the time it was 90% leased,shifting cards has its drawbacks also,good for the city not so much for the region as a whole.In the large picture what was really gained.Good thing those pension plans were not needed for anybody's retirement.

I guess you have to also give KK some credit,he must have really cared about the city to help put all of this together.
Because everything he did for the city was based on the love he had for it , Right?

[Gannon]

Thanks, Richard. Damn. The official source is now into conspiracy theorizing, too cool for school.

[Richard]

Good money in parking ,low overhead and if you control it you can regulate supply and demand,need to raise the rates? close a few lots and the demand increases as does the price. Where else are you going to go?

[Shollin]

I worked for Quicken Loans a long time ago when it was based in Livonia. Unless something changed, I wouldn't call it a good paying job. It's basically where beginners in the mortgage industry go. They hire sales people not mortgage specialist.

[313WX]

I worked for Quicken Loans a long time ago when it was based in Livonia. Unless something changed, I wouldn't call it a good paying job. It's basically where beginners in the mortgage industry go. They hire sales people not mortgage specialist.

Pretty much.

There's a very good reason they're hiring 500+ people every 6 months.

And it's not because Gilbert is creating new jobs or because it's a great company to work for.

But of course that doesn't make for good PR to delve into all of that.

[Shollin]

Pretty much.

There's a very good reason they're hiring 500+ people every 6 months.

And it's not because Gilbert is creating new jobs or because it's a great company to work for.

But of course that doesn't make for good PR to delve into all of that.

Turnover was high. You worked a minimum of 50 hours a week on the phone selling mortgages. I got suckered in because they advertised 50K a year plus salary. I was working 50 hours a week and commuting from Harper Woods to Livonia. It was hell.

[313WX]

Turnover was high. You worked a minimum of 50 hours a week on the phone selling mortgages. I got suckered in because they advertised 50K a year plus salary. I was working 50 hours a week and commuting from Harper Woods to Livonia. It was hell.

Starting wage now is $24K.

You better be a top seller too, or they will let you go.

[Islandman]

Yet, here we are again almost dancing with a 1 trick pony, just like the auto industry.

What will happen to downtown if Gilbert goes belly up? Oh, right, it'll be the mid 90s again.

[Bham1982]

What will happen to downtown if Gilbert goes belly up? Oh, right, it'll be the mid 90s again.

That's what I'm always thinking. One guy is buying everything downtown, and this guy is in basically the riskiest industry in existence.

And the fact that everything is selling to him, dirt cheap, and there don't appear to be other interested parties, isn't exactly a good sign.

And if Gilberttown is really leading to a Detroit revival, why is every property owner downtown eager to sell to Gilbert? Why wouldn't they hold onto their supposedly valuable assets, awaiting the big upcoming returns?

In short, if you believe in the long-term prospects for downtown, why would you sell your holdings downtown?

[Islandman]

Bham, for once, we agree on something.

[Richard]

Because the deck is now stacked by eliminating the brownfield credits and incentives,well not eliminated just moved into a massive venture capital account backed by the taxpayers,call it the bank of Michigan if you may where private industry is funded by the taxpayer but controlled by private parties,which has the power to say what happens where and how and who.Kinda like how it is handled in countries like Venezuela.

This does not go to well with funding sources outside of the state who have to raise capital without a state funded checkbook.They kinda hold grudges which in turn is having a negative effect on the city when it comes to outside investment.

[Gannon]

So Gilbert runs a Mortgage Sweat Shop?

Based upon the Used Car Salesfloor model of employee training and encouragment?!

That explains some of the conversations I've encountered at Foran's...some of these kids are not the brightest or deepest in the gene pool. But they ARE loud.

So ya gotta give 'em that. Gilbert doses on the stress, they drink it off after work. Good for the Gilbertown bar business...

[Gannon]

We gotta get on this quickly.

Is there one or two Ts in Gilbertown? Gilberttown?

[Shollin]

Starting wage now is $24K.

You better be a top seller too, or they will let you go.

That's close to my base like 10 years ago. Some things never change. They paint the office in pretty colors and give free slushies so magazines rate it as a great place to work.

[Gannon]

Um-m-m, slushies. Are they made of Energy Drink?

[De'troiter]

Um-m-m, slushies. Are they made of Energy Drink?

Even better, they are made from FAYGO!

[Richard]

The way you guys put it makes it sound like a page out of the Florida timeshare sales rep handbook.