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The best laid plans of mice, men and, even, Trumps ...

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Guest | 22 Nov 2012, 04:13 AM Agree 0

As many as 50 disgruntled and disillusioned investors are now scrambling to get out of deals that are set to close this month. Final payments, averaging over $500,000 are due to the developer by November 29.  Investors snapped up the condo-hotel suites in the luxury Trump International Hotel & Tower, Toronto, but now claim they were sold on the unit’s cash-flow potential in spite of a ruling from the Ontario Securities Commission in 2004 that forbid it. A 10-page ruling stated that potential buyers should “not be provided with rental or cash flow forecasts or guarantees or any other form of financial projection or commitment.” Just a week before final payments are due, investors are coming clean about how they were presented with all the ways the condo-hotel units were revenue-generating cash cows. “Sales staff had actual spreadsheets,” said one anonymous investor. “They could tell you the rate of return unit by unit, floor by floor.” Many purchasers now feel they bought under false pre-tenses when signing up for units seven years ago, and are now unable to sell the units or secure mortgages for the full agreed-upon price. In addition, mounting maintenance fees and property taxes are coming in far higher than Talon’s initial predictions, leaving many investors simply unable to fork out the cash. According to one investor, maintenance costs jumped as much as 40 percent, resulting in monthly fees of $2,500. The project is now suffering with reduced occupancies and lower room rates than were projected and, indeed, it may well need to offset costs. The Trump is currently running with an occupancy rate of 1 per cent to 50 per cent, with room rates on average $300 lower than projected. A costly incident of a window falling out from the 34th floor last week has also challenged investor confidence. Is this star-powered development heard the end of Toronto’s hotel-condo dreams? Or is it simply the casualty of poor planning? Post a comment with your thoughts.
  • Ed Novak | 27 Nov 2012, 07:57 PM Agree 0
    I have owned and operated a furnished condo rental company. I am also a real estate broker. I have had many people ask me if they should by in Trump. My answer was always a definite "No" - for one simple reason - bad location. In as far as the numbers and projections, I have had the same spreadsheets for my own business and I know how these numbers can be very easily manipulated to meet marketing requirements. But I don't understand how people bought into this despite the 1 King West fiasco. Its the same story all over again! Dont people hear the news and read newspapers? Good luck to them trying to get out of these deals. They will either have to close or lose their deposits.
  • db | 28 Nov 2012, 01:04 AM Agree 0
    These "investors" im sure all saw get rich quick written all over this investment and chose to dive in without doing their homework. I would be willing to bet there wasn't too many, if any seasoned investors in on this project. Now that they learn the truth, they look all around for blame. I'm sure if the investment panned out to be WAY MORE than expected, the wanna be investors wouldn't be running around handing out bonus cheques to the developer or others that helped got the project off the ground.
  • Oliver | 28 Nov 2012, 05:38 PM Agree 0
    Greed and wishful thinking trump reason for many (not only the gullible) : it is part of the human condition from which we can never escape...nonetheless...caveat emptor....!
    and there is no excuse for failing to do due diligence !
    This is why a seasoned expert is your best resource always!
    So seek tone out next time!
  • Oliver Teekah | 28 Nov 2012, 06:10 PM Agree 0
    It would be interesting to see if Talon in fact violated the conditions of their prospectus in their marketing 'projections'... and how this would impact their liability.... again caveat emptor re a prospectus with 'exceptions' and conditions!... do not be bamboozled by the projected numbers.... they are 'projected' for a reason!!! and always think 'what if?' whenever you assess any prospectus, conditions, exceptions... etc... Caution: a Prospectus does not automatically validate and investment ... it is tantamount to trusting someone simply because he carries around a bible!
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