Tuesday, September 8, 2009

So another story of the 90's in Aussi: Boy the same story so many different examples

How many of you old dudes remember Gomer Pyle USMC ? Let me remind you; he was a bumbling Seaman whose standard line was SURPRISE SURPRISE, when it should have been obvious to anybody and not a surprise.

Yes get to the point Aivars. In the 80's in Aussie credit was freely available the Japanese where throwing money into Aussie like you can image, we have seen how everyone put money into the States over the last 10 years.

Anyway the National Australia Bank (NAB) owned 50% of all of the Pubs (bars that aussies drink at) in Australia and when credit tightened many people could not afford the repayments (sound familiar?) the NAB ended up owning PUBS. Who benefited? Those that bought the PUBS from the banks. Who Lost? The Initial investors!

As for the Japanese a friend of mine bought a golf course just near the Great Barrier reef that the Japanese built at a cost of $250 million for $9 million. At $9 million the numbers worked.

Fascinating to watch history repeat itself read on.

Aivars Lode

Fontainebleau Miami Beach may face default declaration

The Wall Street Journal reported that the FontainebleauMiami Beach may face a default judgment because of unpaid contractor claims.



The Fontainebleau Miami Beach is vulnerable to a declaration of default by its lenders, partly because of about $60 million in unpaid contractor claims, the Wall Street Journal reported Friday.

Citing unnamed sources, the paper reported that a 45-day agreement by lenders not to declare default on $670 million in construction debt expired Aug. 31. The Fontainebleau allegedly violated the terms of its loan, in part, because it didn't maintain appropriate reserves to cover the $60 million in construction liens on the oceanfront property, the paper said. The hotel's owners are contesting the debts in court.

In a statement to the Journal, the Fontainebleau said it has not missed a loan payment and is ``engaged in constructive negotiations with our lenders.'' Violating the terms of a loan while still making payments is considered a ``technical default,'' generally the lowest level of debt troubles.

Fontainebleau executives did not respond to interview requests Friday. But in a statement to The Miami Herald, Howard Karawan, COO of Fontainebleau Resorts said: ``Fontainebleau Miami is a world class resort and our performance is among the strongest in the area. While this tough economy has created challenges that we are actively addressing with our lenders, Fontainebleau Miami will continue to provide an outstanding experience to its guests for many years to come.''

The potential trouble with the Fontainebleau Miami Beach comes as the hotel's primary owner, Jeffrey Soffer, grapples with bankruptcy proceedings for the Fontainebleau Las Vegas.

While both are run by Soffer's Fontainebleau Resorts, the projects are separate corporate entities. The Fontainebleau Miami Beach has not filed for bankruptcy protection and has not played a role in the Las Vegas bankruptcy case.

The Las Vegas property is now an idle construction site after lenders cut off funding to finish what was intended as the sister property of the Fontainebleau Miami Beach. Soffer bought the Miami Beach property in 2005.

The purchase marked a milestone for Jeffrey Soffer, the son of Donald Soffer, who earned legendary status in South Florida's real estate industry in the late 1960s when he developed Aventura out of swampland north of Miami.

In recent months, the Fontainebleau Miami Beach has enjoyed a surge of cash as buyers closed on condominium units in the second of two condo-hotel towers at the resort. But the hotel has been hammered by a nationwide pullback in meetings and business conferences, particularly in resort areas like Miami Beach.

Though rates for its hotel rooms are down, Fontainebleau executives say they're beating forecasts, doing better than competitors and renting most of the resort's beds each week.

Last year, Soffer sold half of the resort and its debt for $375 million to Nakheel Hotels, the investment arm of the Dubai government.

But a source familiar with the deal told The Miami Herald that Nakheel agreed to buy a completed project; overruns and the debt tied to the extra bills were to be the responsibility of the Soffer side of the partnership. Of the $375 million that Nakheel paid, Soffer shifted $200 million to pay for cost overruns at the Vegas Fontainebleau project.

The Journal reported that lenders, led by Bank of America, are withholding a final $26 million on the $670 million construction loan until the Fontainebleau Miami Beach resolves the problems with contractors.

A Miami judge has scheduled a hearing Wednesday for the Vegas Fontainebleau project. Scott Baena, the Bilzin & Sumberg lawyer representing Fontainebleau Las Vegas, said in a motion filed Tuesday that Soffer's team and the lenders have not yet reached a deal that would allow Fontainebleau Vegas to continue spending cash during the costly Chapter 11 bankruptcy proceedings.

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