Welcome to San Diego Blog | April 18, 2010
Vantage Pointe San Diego Defaults on Loan
Vantage Pointe condos which is a new construction high rise building consisting of 679 units in the Core District of Downtown San Diego appears to be in default on its loan with the bank. Construction at Vantage Pointe San Diego was completed last year. Given the weak state of the residential finance industry, the 300 or so buyers that were previously under contract had their deposits returned because of the inability to obtain financing on the building as a whole.
Once Vantage Pointe, the largest residential high-rise condo project in all of Downtown San Diego, let all of their buyers out of the contracts, they had to restructure the project into 5 separate phases each to be sold at a different time. The goal was to be able to reach 50% sales of each phase so Fannie Mae would buy the loans on the secondary market. Bank of America, Wells Fargo and Chase were unwilling to step up and close any loans unless Fannie was willing to buy them.
To this day, not one sale has closed at Vantage Pointe. If you see lights on in the building and people stirring around, it is because the developer rented a number of units to help carry some of their costs. The developer has very little incoming revenue and is not able to pay off the loan at this time.
The loan actually came due last September, but the lender just filed the notice of default last month. The developer and lender have been talking for some time to iron out an extension that would give Pointe of View ample time to start closing some of the sales they have under contract. According to the notice of default that was filed, the outstanding loan balance is $197.8 million.
“We’re still on good terms with our lender, and working together to have an orderly sale of all the units and negotiating the final terms of the sellout period, which would be 24 to 30 months, ” said Klapstein, the developer’s representative.
At this time, 49 residences are in escrow out of 99 total in the project’s first phase. Unfortunately none of these sales can close until Pointe of View receives fannie mae approval and gets a release of the NOD from the lender.
Condo sales in Downtown San Diego are gaining momentum at this time, but I’m not sure if Vantage Point will be successful with sales. The location is not as good as most resale condos on the downtown marketplace and the floorplans tend to be on small side with HOA dues in vthe moderate to higher range given the overall quality of the tower. If you look at the current condos they have under contract at Vantage Pointe, you will see that they are all of the lowest priced one and two bedroom units.
I wouldn’t expect that they are able to move the higher end product in the building because there are too many good opportunities to buy a previously owned condos that are superior in quality and location for a similar or lower price. I don’t personally recommend Vantage Pointe as one of the smart choices in downtown condos, but new developers usually spend the money on marketing which in turn drives the sales. I guess we will see how successful they are if they can get past the notice of default.
Please share your thoughts on Vantage Pointe.