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Old February 13th, 2006, 11:33 PM   #521
spyguy
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Spire plan built upon top dollar
Developer Christopher Carley needs to sell buyers on highest-priced condos in Chicago


By Thomas A. Corfman
Tribune staff reporter
Published February 12, 2006


If you're looking to invest in a high-profile, high-risk real estate project, Christopher Carley has the deal for you: a 115-story condominium/hotel skyscraper designed by architecture idol Santiago Calatrava that would be the nation's tallest building.

Invest $1 million in the twisting, 2,000-foot-tall tower, called Fordham Spire, and get back a whopping return of between 35 percent and 45 percent, the Chicago developer says.

The astronomical returns are based on an average condo selling price of more than $1,000 a square foot, a feat that no developer has achieved in Chicago, including flashy New Yorker Donald Trump.

An inside glimpse into the deal reveals not only the huge potential profit to be reaped by Carley and his financial backers but also highlights the formidable risks that lie ahead: skyrocketing construction costs, rising interest rates and uncertainty about the demand for the ritzy condos and high-priced hotel rooms.

A close examination of the proposal also shows how key aspects of the deal have evolved in response to changing market conditions. To gauge those modifications, the Tribune obtained a summary of the project given to prospective investors last fall and compared it with information that Carley provided during interviews.

The developer declined to comment on some aspects of his current proposal, which the Tribune estimated using real estate industry standards and information from the earlier proposal.

To be located along the north bank of the Chicago River on the west side of Lake Shore Drive, the building is estimated to cost $567 million.

If the $1,000-a-square-foot selling price seems steep, prices for the hotel-condo rooms will be even higher, Carley said. Under the hotel-condo concept, rooms are sold as condominiums to private buyers, who allow the hotel operator to rent them out when the owners are not using them. The skyscraper would include as many as 300 luxury condominium units and 150 swank hotel rooms.

Reaching these lofty prices may depend on whether the downtown condo market is returning to "normalcy" after a frenzied phase driven by extremely low interest rates and speculative buying.

"In what environment are you establishing the $1,000-a-foot average?" said Tracy Cross, president of the Schaumburg residential consulting firm that bears his name. "If it's an environment of normalcy, that market doesn't exist."

Yet Carley, citing the results at rival projects and the pattern of downtown condo price increases since 2001, said he expects his project could average $1,100 a square foot.

The market leader in price is the Trump International Hotel and Tower, which last summer was said to have reached an average price of $750 a foot after selling about three-quarters of its units. More recently, Trump's prices have hit $1,000 a square foot, enticing Carley and other developers.

But most luxury condominium high-rise developments are priced between $500 and $600 a square foot, although several projects have achieved higher prices on selective units.

"Is development going to slow down in the next year or two because rates go up?" Carley said. "Rates, in my lifetime, are the lowest ever."

Carley said he is increasing the number of units by making some of the them smaller and by cutting the retail space to 5,000 square feet from the 50,000 square feet originally proposed. And although a deal with broadcasters is far from certain, antennae could add annual revenue of between $7.5 million and $10 million, at a cost of roughly one year's revenue, he said.

Yet Fordham Spire must achieve those unprecedented prices to cover escalating construction costs, which the developer said are approaching $300 a square foot, including "a lot of big contingencies."

In the fall, Carley told investors that construction of the nearly 1.2 million-square-foot structure would cost about $221 a square foot, or $264.2 million, including contingencies. Carley, chairman of Chicago-based Fordham Co., declined to comment on the earlier cost estimate, which sources said was overly optimistic.

But even $300 a foot may not be enough to cover construction, given the tower's unique design and tremendous height, some experts said.

"If someone were to tell me that building was $350 to $450 a square foot, I would believe that number, based on other projects that I know," said Ron Klemencic, chairman of the Council on Tall Buildings and Urban Habitat.

"As buildings go to 1,500 feet or 2,000 feet, the costs go up dramatically," said Klemencic, president of Seattle engineering firm Magnusson Klemencic Associates Inc.

A lot of leverage

To achieve exponential financial returns, Carley is relying on a high degree of leverage, or borrowing. Under one scenario, equity investors, including the developer himself, would invest about $50 million.

He said he has tentative agreements for that investment, which he called "huge" because that portion of the financing is usually the most difficult to raise.

Equity investors face the biggest risk of being wiped out if something goes wrong, but the biggest profit if things go right.

The payoff on that investment is projected to be between 35 percent to 45 percent, he said, using a profitability measure called the "internal rate of return" that factors in the length of time the deal would take. Less audacious, but more realistic, developments might aim for a return between 18 percent and 22 percent, experts said.

Investors have been slow buying into Carley's starry-eyed vision of condos in the sky, with an average price of more than $2 million.

"It's not like buying T-bills," he said.

Nonetheless, the $50 million equity stake, when combined with a $120 million mezzanine loan, would account for about 30 percent of the project's cost, said Carley. If so, the total project cost is estimated at $567 million, leaving Carley to obtain a construction loan of about $397 million. He declined to comment on the size of the construction loan or the project's total cost.

A mezzanine loan is a kind of second mortgage, typically made by opportunistic investors who charge higher interest rates than banks because they take more risks.

The financial structure of the deal still could vary. Carley said he is in negotiations with several financial institutions and investment firms. As an alternative, he said, he also is in talks with a "major national development" firm about participating in the project.

Late March deadline

The contract to buy the site, for the lofty price of about $64 million, originally required that he close on the purchase in late March, but he has obtained an extension for an unspecified period.

Now, Carley expects to announce financing next month, with construction to start in early 2007.

If he doesn't work out the financing details soon, Carley said he could obtain a short-term loan to purchase the site and start a marketing blitz, including the construction of a $1 million sales center.

Yet, in an era when investors and lenders are targeting large amounts of money for real estate, discussions about financing new developments also are at an all-time high.

"Everybody with capital is saying, `Show me your deal,' and smart developers are saying, `Show me the money,'" said Bruce Cohen, chief executive of Chicago investment firm Wrightwood Capital. "But at the end of the day, most of these deals aren't being capitalized."
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Old February 14th, 2006, 08:29 PM   #522
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From the NBC Tower Lot


Just north of LPT


Redux of that ealier, yet still awesome, shot of my new alpha-mapped spire


Assorted shots, the last one was a failed attempt to get the entire tower reflected in the water, but it took 15 minutes to render, so you're going to look at it anyway.
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Old February 14th, 2006, 09:30 PM   #523
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you need some GI boy...

its the 3d worlds "make pretty button"
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go silver line go!!!
...go aqua line go???

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Old February 15th, 2006, 02:15 PM   #524
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I love those models STR!
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Old February 15th, 2006, 04:29 PM   #525
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the problem is by the time he completes this tower, there will be at least 30 other twisting towers, probably 15 of which will be designed by calatrava as well..
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Old February 15th, 2006, 05:40 PM   #526
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^but this one's the best!
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Old February 21st, 2006, 08:26 AM   #527
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Quote:
Originally Posted by STR
...

Assorted shots, the last one was a failed attempt to get the entire tower reflected in the water, but it took 15 minutes to render, so you're going to look at it anyway.
http://img523.imageshack.us/img523/2866/water.jpg[/IMG]
cool images...15 minutes! that's fast! I use form-z for renderings and sometimes it takes me 2 hours!! I have a top a' the line comp. but my video card sux...what video card do u use?
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Old February 21st, 2006, 04:45 PM   #528
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Are you guys getting so excited about the proposal that you forgot to open "Part 2"?

Hello anyone, Post 528 ...
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Old February 23rd, 2006, 11:35 PM   #529
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I PREFER THE SKYSCRAPERS OF CALATRAVA..NO LIKE HIS PAVILIONS OF FAIR COPIED OF SYDNEY OF WHITE COLOR AND WITH FUTURIST FORMS..UN GREETING
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Old February 24th, 2006, 12:41 AM   #530
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Quote:
Originally Posted by latennisguy
cool images...15 minutes! that's fast! I use form-z for renderings and sometimes it takes me 2 hours!! I have a top a' the line comp. but my video card sux...what video card do u use?
An nVidia 6800GT, but what really helps is my 2GB of RAM and that the PC I render with is not connected to the net so I don't need firewalls or anything else eating memory and CPU cycles.

I've also simplified the lighting so that most renders are down to 10 minutes, though for a large image (3000x2000 or so), it can take almost 30 minutes.
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Old February 24th, 2006, 07:46 AM   #531
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^ What 3-D program did you use?
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Old February 25th, 2006, 06:05 PM   #532
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I dont like this kind of spire, but it fix very well with this tower.
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Old February 28th, 2006, 04:48 AM   #533
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Some news from our Chicago slueth, BVictor:

Okay, I've just come from the sales center, and this is what I have so far...

They began taking reservations on Saturday for VIP's, not the people who've just signed up online. These are people who immediately wanted to plop down money. So far there are 13 reservations, 1 for a $7million penthouse. In order to reserve you must put down a $20,000 deposit to hold your unit from 30-60 days. After that if you want it you must place a 10% down payment towards the unit and you can use the deposit towards it. They will probably be dealing with the VIP's for the next few weeks then begin dealing with others. Right now only about 130 of the 250 units are being shown because floorplan layouts aren't complete and there's a good chance that they'll change.

The smallest unit of 705 sq feet cost between $805,000-$825,000

A full floor penthouse on floors 90-99 cost between $7,400,000-$8,300,000

Duplexes on floors 100-104 will set you back only $15,500,000-$20,000,000

Hopefully more information will be available in the upcoming weeks.
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Old March 1st, 2006, 02:44 AM   #534
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Quote:
Originally Posted by Threehundred
^ What 3-D program did you use?
3D Studio Max 7.
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Old March 25th, 2006, 02:14 AM   #535
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I believe that there are 2 threads about Fordham Spire. I believe that they should be intergrated if possible.
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Old March 25th, 2006, 02:15 AM   #536
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Nevermind....

I forgot about the 500 post limit on this forum.

Disreguard.
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Old March 25th, 2006, 02:16 AM   #537
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^The one I created is the newest one. This one is well over 500 posts so according to rules another one had to be made.
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Old March 25th, 2006, 02:16 PM   #538
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cool rendering
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Old April 1st, 2006, 05:06 AM   #539
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German bank may finance proposed twisting tower
By Thomas A. Corfman, Tribune staff reporter.
Tribune architecture critic Blair Kamin contributed to this report
31 March 2006
Chicago Tribune

Developer Christopher Carley is negotiating with German financial giant Deutsche Bank about financing the twisting $550 million lakefront skyscraper to be designed by celebrity architect Santiago Calatrava.

Carley earlier this month said he is in final negotiations with an unnamed "European financial institution" that would provide "the entire package of financing" for the luxury 124-story condominium/hotel structure. Carley on Thursday again declined to identify the financial institution, but sources say the name Deutsche Bank has surfaced in recent weeks.

The Munich-based bank is already the lead lender on Donald Trump's riverfront residential/hotel skyscraper, which is under construction. The New York developer bluntly questioned whether Deutsche Bank would do the new deal, in part because he predicts the costs of Carley's 2,000-foot-tall tower will skyrocket to more than $850 million.

"If any institution is stupid enough to finance that building with a [projected] cost of $550 million, then they deserve to lose their shirt," Trump said in a telephone interview. "I don't believe that Deutsche Bank is a stupid institution."

Carley shrugged off Trump's criticism.

"Do I care?" said Carley, chairman of Chicago-based Fordham Co. "He didn't think this thing would get built either, but it will be fun."

He said he expects to announce financing arrangements in about two weeks.

A New York-based spokesman for Deutsche Bank declined to comment.

Carley has previously said his other options include two U.S. financial institutions.

The building, to be called Fordham Spire, would be located west of Lake Shore Drive along the north bank of the Chicago River.

Carley has said estimated construction costs have risen 10 percent since the project was unveiled July 26. But he recently hired prominent Chicago construction firm Walsh Group to be the general contractor.

About his cost estimates, Carley said, "I'm comfortable with them now. Things change."

Trump financed his namesake 90-story tower at 401 N. Wabash Ave. in part with a $640 million loan from a group of financial institutions led by Deutsche Bank. The construction loan was one of the largest in the city's history.

For the bank to take the lead on Fordham Spire would be a big bet on the luxury condominium market, at a time when many experts are concerned about overbuilding.

"We're doing well, but other people are not," Trump said.

Trump International Hotel and Tower has 472 condominium units and 286 condo hotel units. Trump said he has sales of $726 million, or 78 percent of the projected total

Fordham Spire would be a smaller project, with 300 condos and 150 condo hotel rooms. Last fall Carley was seeking nearly $428 million in financing for his project, but that amount has probably increased.

Any competition between the two projects may be lessened by the different completion dates. Trump's project is expected to be completed in 2008 while Fordham Spire would not be completed until 2010.

Carley has raised about $10 million in equity from a group of investors that includes two no-nonsense suburban developers, attorney Michael Firsel and retail expert David Bossy, principals in Mid-America Development Partners LLC, according to people close to the project.

Carley declined to comment on the identity of the investors, but said the capital was "mostly Fordham money."

Firsel and Bossy could not be reached for comment. Their Oak Brook-based firm, founded in 2001, has expanded from its original focus on retail real estate to mixed-use projects and hotel developments.

A group led by Mid-America was a competing bidder against Fordham last year for the Ambassador East Hotel, 1301 N. State Parkway.

The Mid-America group included Chicago-based management company Portfolio Hotels and Resorts, and Lombard hotel investment firm Harp Group.

After Fordham won the bidding, Carley said, he brought the Mid-America group in as partners. The venture plans an extensive renovation of the Gold Coast property and a conversion to hotel condominiums.

At Fordham Spire, Portfolio President Helmut Horn has played a key role in negotiations to have the hotel portion of the project managed by Crillon, a new luxury brand, although a deal is not certain, sources said.
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Old April 1st, 2006, 05:29 AM   #540
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Already posted in Part Two
http://www.skyscrapercity.com/showthread.php?t=325664


Way over 500 posts
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