https://www.twincities.com/2021/12/06/a ... s-on-hold/
Lost its financing
Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
I guess the rent control people would rather the site remain a vacant lot.
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
To be fair, the Frogtown neighbors (including Ms. Swift quoted in article) had also voiced their preference for the vacant lot status quo versus any realistic development here. We'll see if her claim this is a bluff holds water.
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- Nicollet Mall
- Posts: 129
- Joined: May 14th, 2019, 1:56 pm
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
There is no surprise on this or any of the other "holds" that are likely to continue to pile up for St. Paul. Who in their right mind is going to want to finance the new residential towers on the downtown Riverfront when the rents would be prevented from even keeping up with inflation. The across the board rent control passed in the referendum is mindless. There are too many variables that can't be taken into account by blanket rules. Referendums can do a lot of good, but the fine print can undermine it all.
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- Wells Fargo Center
- Posts: 1138
- Joined: June 1st, 2012, 8:03 am
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
I would not believe that this current period of inflation would prevent the profitability of an apartment building.
The largest single expense is going to be debt service. Which is locked in to origination of the debt. Since everyone believes no one is going to ever move out of a rent controlled apartment one does not need to figure a contingency for vacancy. Maybe a quarter of total expenses are subject to inflation.
The city of Saint Paul's fiscal position and the specter of necessary massive property tax increases are much more concerning than the rent control ordinance
Even in this heightened level of inflation (4.6% Core Inflation - all items less food and energy) greatest in 30 years. Its still 2.6% averaged over the last two years.
A savvy investor would no doubt figure out the new landscape. I would still fully expect the city council to completely repeal rent control next year. But there will be nice seven month period for vulnerable renters in the Capital City.
The largest single expense is going to be debt service. Which is locked in to origination of the debt. Since everyone believes no one is going to ever move out of a rent controlled apartment one does not need to figure a contingency for vacancy. Maybe a quarter of total expenses are subject to inflation.
The city of Saint Paul's fiscal position and the specter of necessary massive property tax increases are much more concerning than the rent control ordinance
Even in this heightened level of inflation (4.6% Core Inflation - all items less food and energy) greatest in 30 years. Its still 2.6% averaged over the last two years.
A savvy investor would no doubt figure out the new landscape. I would still fully expect the city council to completely repeal rent control next year. But there will be nice seven month period for vulnerable renters in the Capital City.
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- Metrodome
- Posts: 99
- Joined: June 25th, 2020, 1:50 pm
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
A lot of CRE financing is 5 year maturity (and to do that, you'll start the refi process in ~4 years). Thus, if this period of inflation persists, it is certainly possible that a building built today could be re-financing in an environment with significantly higher rates.I would not believe that this current period of inflation would prevent the profitability of an apartment building.
The largest single expense is going to be debt service. Which is locked in to origination of the debt. Since everyone believes no one is going to ever move out of a rent controlled apartment one does not need to figure a contingency for vacancy.
...and even more relevant, construction financing is usually only for the period of construction. Sometimes it rolls automatically into 'permanent' (i.e. the 5 year financing), but certainly not always nor even most of the time (I think). Thus the re-finance event is likely only 18-24 months away - right in the period where current projections say the fed is expected to have raised rates several times.
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
Holy cow this is going to happen after all.
Joey Senkyr
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- Wells Fargo Center
- Posts: 1034
- Joined: September 20th, 2017, 12:40 pm
- Location: North Loop
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
Yeah, Chris Osmundson is Director of Development for Alatus. I would say if he is tweeting about it, it's finally happening!Wait, it is?
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- IDS Center
- Posts: 4093
- Joined: June 3rd, 2012, 9:33 pm
- Location: Merriam Park, St. Paul
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
Q. What, what? A. In da butt.
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- IDS Center
- Posts: 4093
- Joined: June 3rd, 2012, 9:33 pm
- Location: Merriam Park, St. Paul
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
Q. What, what? A. In da butt.
Re: Alatus Development - 411-417 Lexington Pkwy (MNDOT Snowpile site)
Earthwork has begun! Foundations are being dug and it appears everything is full steam ahead!
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