Originally Posted By Dr Hans Reinhardt I don't think that the mall and the hotels are one and the same, meaning that the terms of their construction and financing are separate. The point is that IF the hotels really are coming, the mall isn't going anywhere. Who would buy the mall as it is without the possibility of the built in clientele that the new hotels might likely bring?
Originally Posted By Dr Hans Reinhardt It looks like the right to develop the condo/timeshares is also up for auction: <a href="http://articles.latimes.com/2010/mar/18/business/la-fi-gardenwalk18-2010mar18" target="_blank">http://articles.latimes.com/20...010mar18</a> Given that the development rights are up for auction we can pretty much assume that AGW is going to be around for a long time.
Originally Posted By SuperDry <<< Given that the development rights are up for auction we can pretty much assume that AGW is going to be around for a long time. >>> What the article seems to say is that the parking structure and the mall itself are under separate ownership. I'd make an educated guess that even if they're both currently owned by the same parent company, that the $210 million of bonds that are under default are secured only by the mall itself and not the parking structure. So, the parking structure as an independent entity appears to have a) been constructed with the idea that residential or hotel space would be build above it someday, b) the rights to develop it as such are being abandoned by whomever acquired them originally, and c) the entity that owns the parking structure is now going to auction them off. Perhaps the most interesting thing about this is that it appears that somebody could buy these development rights and build out a hotel or residential housing above the parking structure independent of what happens to the mall itself. This means that unless whomever buys the mall at auction also buys the parking structure and it's "above" development rights, then the parking structure is staying where it is no matter what happens to GW. Nobody would buy or try to sell development rights above the parking structure if someone could buy the mall next door and then tear the whole thing down.
Originally Posted By Dr Hans Reinhardt Exactly what I was thinking, although I would go a step further and make the logical assumption that the mall and parking structure go together. The various separations in the development rights on this project could explain why the plans to develop the hotels is still on the table despite the mall's financial woes.
Originally Posted By SuperDry <<< But presumably the new owners would assume any debt that AGW already has. >>> No, that's not right. Hans, you seem to be stuck on this point, and I'm not sure why. The cynical part of me would say it's because it helps justify your position that GW can't be financially viable in any situation. In any event, let's go over it again: Take the example of someone that buys a house in SoCal for $600k at the height of the bubble, and puts 10% down. They have a mortgage for $540k. The real estate market collapses, and their property is now worth $400k. They can't afford the payments, so they walk away from the property and the bank forecloses. The bank sells the property at auction at its new current market price of $400k. Whoever buys the house at auction for $400k isn't somehow also on the hook for the extra $140k to completely satisfy the original loan. Instead, the bank eats the shortfall as part of the foreclosure process. It's going to be the same for GW. Whomever buys the property is going to pay the money to the bondholders to (partially) satisfy the $210 million in defaulted bonds, and will own it free and clear. If the property brings in less than $210 million at auction, the bondholders get only partial payment on their bonds and that's all they'll ever get, and the original owners will get nothing. The new owners will pay whatever they pay for it, and nothing else.
Originally Posted By SuperDry <<< I would go a step further and make the logical assumption that the mall and parking structure go together. >>> I wouldn't, and here are several reasons why: The most obvious is this line from the article: "The mall itself, which is separately owned, is in the foreclosure process. It's set to be auctioned April 8." That would tend to imply that the mall and the parking structure are separately owned, no? Even without that piece of information, I think it can be reasonably inferred based on the development rights above the garage being talked about. This is because the development rights above the garage have no value unless the garage is independent of the mall itself. No bank or other lender is going to finance the construction of residential or hotel space above the parking structure if someone could come in and buy the land for both the mall and the structure and tear the whole thing down. Given that there was someone that had owned those development rights and has recently given them up, and that someone is going to try to put them up for new bids, tells me that this has been thought out in advance and that these rights are marketable. That would only be the case if whoever bought them could be assured that the parking structure will stay as it is.
Originally Posted By Dr Hans Reinhardt Okay, that all makes sense. Still, none of that implies that it would practical for the new mall owners to demolish it for some other purpose. I have to assume from the drawings that the garage and the hotels are somehow physically joined to the mall.
Originally Posted By disneywatcher >> It looks like the developers of CementWalk, er.... GardenWalk, are in some deep financial trouble and the mall is heading towards possible foreclosure. << I recall you often asking why improvements have been so slow to come to the area around Disneyland. And often complaining about -- and rightly so -- the lack of progress in upgrading the community. The failure of Garden Walk to attact enough customers should be part of the answer you've long been trying to get. The area around Disneyland is peculiar because it thrives by feeding off of a core of tourists and locals who don't spend their time and money in that area the way they might in other cities. A lot of them are primarily interested in wiling away the hours on Disney-owned property and then getting the heck out of there. Then, too, the fact that DCA hasn't exactly done for Anaheim what all the theme parks have done for Orlando, or what word-of-mouth has done for the two Disney parks in Tokyo, hasn't helped matters.
Originally Posted By Dabob2 I'd have gone over there if there was anything worth going over for. But DTD was closer, far nicer atmosphere... there was just no reason to go.
Originally Posted By Jim in Merced CA Another issue is that Garden Walk is essentially blocked -- visually -- from the Disneyland property. If GardenWalk and that older motel were to change places, I wonder if foot traffic would improve. We were at GardenWalk in November 2008 (only because we stayed in that older motel). We thought GardenWalk was a real bust.
Originally Posted By Dr Hans Reinhardt "I'd have gone over there if there was anything worth going over for. But DTD was closer, far nicer atmosphere... there was just no reason to go." That pretty much sums it up for me.
Originally Posted By crapshoot This article was from back on Jan 27. <a href="http://ocresort.freedomblogging.com/2010/01/27/disney-area-theater-files-for-bankruptcy/32769/" target="_blank">http://ocresort.freedombloggin...y/32769/</a> "By filing for bankruptcy, the movie theater (Cinema Fusion) staved off an eviction lawsuit that was supposed to go to trial Monday, said Helen Ryan Frazer, an attorney for GardenWalk Cinemas. Pending lawsuits are stopped while businesses go through bankruptcy proceedings. Bill Stone, a principal at Excel Realty that runs the mall, called the bankruptcy “a stall tactic.” The movie theater, called CinemaFusion, is clashing with Excel over rent payments. The bankruptcy filing shows that the cinema owes Anaheim GW LLC, the owners, about $2.5 million. Ryan said the mall failed to bring in high-quality tenants as promised, resulting in lagging business and an inability to keep up with lease payments."
Originally Posted By TP2000 And no one showed up to bid at the foreclosure auction on Tuesday, and so GardenWalk was returned to Citibank. <a href="http://www.ocregister.com/news/mall-243222-gardenwalk-opened.html" target="_blank">http://www.ocregister.com/news...ned.html</a> Too many banks are starting to own failed malls, hotels, and commercial developments. The American banking industry was able to fake it for about 18 months after the subprime mortgage thing exploded before the banking crisis hit in September, 2008. How long can they fake it this time with all these malls on their books? And what happens to GardenWalk in the meantime? And where is Disney in all this? Lotsa questions.
Originally Posted By Dr Hans Reinhardt The opening bid was only $70 million and no one made even one bid? Geez. "And where is Disney in all this?" Obviously they couldn't care less.
Originally Posted By SuperDry <<< The opening bid was only $70 million and no one made even one bid? Geez. >>> <<< How long can they fake it this time with all these malls on their books? >>> I know common sense doesn't necessarily govern in cases like this, but it would seem to me that Citibank cannot justify the value of that loan at any more than $69.9 million at this point. That's basically a 67% mark-down on the value of their loan. Oops. <<< And what happens to GardenWalk in the meantime? >>> Now that Citibank owns it, I suppose they'll do whatever is in their best interest at this point. They set a minimum value of $70 million, and nobody bid. So, now it's theirs. I would imagine that they'll keep it operating as-is and hope that things get better. I would guess that a completely vacant and abandoned mall is worth even less than the current state of GW, so it seems unlikely that they'd just kick out the remaining tenants and shutter the place. And, I doubt that they're willing to make a substantial investment to change it dramatically. So, I suspect it will just hobble along for awhile as a sore spot in their loan portfolio.
Originally Posted By TP2000 Yeah, you're probably right SuperDry. At least McCormick & Schmick's has good oysters.
Originally Posted By Dabob2 Does this mean Disney could have shown up as the only bidder and gotten it for $70M? Would citibank have been obligated to sell it for that? $70M really doesn't seem like that much money for Disney. That's the price of a D ticket these days, more or less. And then they'd have had control of that land adjacent to both their existing parks and the proposed third park, that they could have done anything they wanted to with? Built hotels, built a waterpark, whatever... perhaps just acted as landlord for a while and let GW hobble along until they figured it out? Yes, there are operating costs associated with this. But still, $70M? It seems a missed opportunity to me.
Originally Posted By believe I would agree that it was a missed opportunity. But then, maybe they know something we don't. Maybe they think they can get it for less than $70M. 70M is less than what Disney paid for the strawberry field!
