[Colwood] Skye & Capital City Centre condos, offices, commercial | 16- to 29-storeys | Under Construction

[spanky123]

You raise a good point. I believe that the League management corp would take a fee for lending money from IGW REIT to Colwood City Centre. It will be disclosed in the OM, you just need to dig through it. Of note as well is that the OM indicates that the money loaned from IGW to Colwood City Centre is unsecured. If the return was 12% and I was dead set on investing in the project, I would be tempted to purchase an M note in Colwood City Centre instead as it appears to rank the highest of the 2nd tier of secured debt.

An OM is a legal document and as a result some of the complexity is a necessity.

You also raise a good point about the accrual of interest on the debt from Colwood City Centre to IGW. There is very clear disclosure in the risk factors that Colwood City Centre/IGW are dependant on their ability to raise new funds in order to complete outstanding projects and meet their financial obligations.

[spanky123]

This is simply an observation and nothing more.

I read today in the TC that Len Barrie is suing his former auditors, Norgaard, Camden, Neale. I believe that the Norgaard refers to Derrold Norgaard who was a tax partner at KPMG.

KPMG are the auditors for Colwood City Centre and I notice in the OM that a D. Norgaard is the representative for a syndicate that has a $12M unsecured loan to Colwood City Centre.

[Sparky]

I think that Norgaard used to specialize in bankrupsies.

[Henry Longmire]

How come they can get unsecured monies for these projects when most developers get laughed at for try to get 50% LTV on secured developments, with presales and experience. Does the OM allow them to lend themselves money unsecured and take fees? how much was the fee, was it enough to pay for a new house?

[spanky123]

Originally Posted by Sparky

I have asked them both.

All I get is that deer in the headlights look.

00

I have a very simply rule for my own investments. If I don't understand it then I don't invest in it no matter what the return.

[Henry Longmire]

Originally Posted by spanky123

I have a very simply rule for my own investments. If I don't understand it then I don't invest in it no matter what the return.

The greater return the greater the risk?

[spanky123]

Originally Posted by Henry Longmire

The greater return the greater the risk?

If I can't understand a deal then I can't quantify the risk. If I can't quantify the risk then I have no idea what a reasonable return should be!

[seymour201]

Colwood developer to relocate CrossRoads pub building.

By Kyle Wells - Goldstream News Gazette
Published: March 16, 2012 6:00 AM
Updated: March 16, 2012 9:16 AM

Altered plans for the Capital City Centre project in Colwood are resulting in rushed plans to move a local business and preserve a historically significant building

http://www.goldstreamgazette.com/news/141240933.html

[sdwright.vic]

^ not certain, but why is this a big suprise that the Crossroads was not going to stay where it is?

[Henry Longmire]

I heard a rumour that League or it's various entities has sold off its best assets to Partners REIT a new company founded by Adam Gant and Patrick Miniutti, (so thats were he went). This does not include Colwood Corners.. Maybe this is Adam Gants life raft.
He must have done well on the fees from all that, but I wonder how a diluted REIT will look now?

http://www.partnersreit.com/index.html

[spanky123]

Originally Posted by Henry Longmire

I heard a rumour that League or it's various entities has sold off its best assets to Partners REIT a new company founded by Adam Gant and Patrick Miniutti, (so thats were he went). This does not include Colwood Corners.. Maybe this is Adam Gants life raft.
He must have done well on the fees from all that, but I wonder how a diluted REIT will look now?

http://www.partnersreit.com/index.html

Partners is publicly held but Adam and Patrick are executives. If Partners had purchased assets from League I would have expected it to be disclosed.

From my reading of the various public filings, Partners itself has a lot of challenges in my opinion.

[Henry Longmire]

Originally Posted by spanky123

This is simply an observation and nothing more.

I read today in the TC that Len Barrie is suing his former auditors, Norgaard, Camden, Neale. I believe that the Norgaard refers to Derrold Norgaard who was a tax partner at KPMG.

KPMG are the auditors for Colwood City Centre and I notice in the OM that a D. Norgaard is the representative for a syndicate that has a $12M unsecured loan to Colwood City Centre.

Derrold Norgaard is not a principle of Norgaard, Camden, Neale.

[PulpVictor]

Used to be a sort of little house of cards. Now it is a huge house of cards. At least League no longer makes their own evaluations. And, they hired a CEO.

[spanky123]

Originally Posted by PulpVictor

Used to be a sort of little house of cards. Now it is a huge house of cards. At least League no longer makes their own evaluations. And, they hired a CEO.

Where did you see that they hired a CEO?

[Candarius]

Originally Posted by Sparky

What do I receive as security for my investment in one of these REIT's?

A piece of paper that says you are the proud owner of a piece of paper showing that you lent some money :-)

If everything then goes according to plan your paper will be worth what is printed on it! Plus interest!

[LJ]

Originally Posted by Henry Longmire

Derrold Norgaard is not a principle of Norgaard, Camden, Neale.

Henning Norgaard is the principle.

[spanky123]

Thanks for the clarification. I should have looked at it more closely.

[Sparky]

I could have been wrong as well. I only filed for bankruptcy the once.

[Henry Longmire]

Originally Posted by spanky123

Partners is publicly held but Adam and Patrick are executives. If Partners had purchased assets from League I would have expected it to be disclosed.

From my reading of the various public filings, Partners itself has a lot of challenges in my opinion.

Out of the fire and into the frying pan?

[PulpVictor]

Sorry. I meant CFO...that was quite a while ago. I haven't really been watching them in the plast year or so.

[Fairbanks]

http://www.goldstreamgazette.com/news/141240933.html

[spanky123]

Read through the latest OM again and found the disclosure on the contamination discussed in this forum.

Groundwater samples collected from certain monitoring wells on such lands indicate concentrations of tetrachloroethene exceeding the applicable Contaminated Sites Regulation Aquatic Life standard. This chemical is derived from a former dry-cleaning business on the Phase 1A Lands which was closed in or about 1987. The Limited Partnership has undertaken certain tests and investigations on the Phase 1A Lands and Phase 2 Lands, and certain parcels adjacent to the Phase 1A Lands which indicate that this contaminant has migrated off-site. The Limited Partnership will take steps during construction of the Development to manage and (if necessary), remediate such contaminant to the applicable regulatory standards for such lands in accordance with all environmental laws and related protocols established by governmental authorities from time to time.

I commented earlier that the assessed value of the Colwood City Centre lands was about $30M. The OM states which properties are included in the LP and I had missed a couple. The correct assessed value is about $42M (excluding the Nob Hill lots which League says they intended to sell and/or transfer to Turner Lane).

[Henry Longmire]

It makes no mention that there was a gas station on the site thirty years ago. It appears the water table is fairly high as this is what carries the contamination off site. This creates a huge liability to adjacent properties. It also calls into question the ability to have underground parking which will effect the FSR even if they build parkades. The high water table is why they are pumping water from the excavation. I assume it makes it difficult to carry out environmental test on soil under water.

They bought these properties from Turner Lane, why would he buy back Nob Hill? The property they purchased from the bankrupt Mogenson is the land he used to dump contaminated soil from his site at Vancouver and View years back. I assume it has been remediated?

$42m was about what they paid for it in 2006. Now they are into to it for $110,000 and rising. Whose valuation provided the rationale for this amount of debt. Has there been any financial proformas or workups provided that show the return on the investment in this project?

[spanky123]

The OM states that in 2009 Colliers assessed the value of the properties to be $97M. I would assume that if League had a more recent assessment for a higher value they would have used that value instead. I don't know where the value of $150M came from unless they were talking about future built out value.

If I recall correctly, League accounts for the Colwood City Centre project as a development property. That allows them to value the asset based on their costs including interest. I believe that is how they arrive at the toal asset value.

There is debt on the balance sheet owing to what appears to be Les' wife. I read the OM with the understanding that perhaps the Nob Hill lands were being transferred to Les in settlement of that debt and other considerations. I could be wrong however.

[hl88]

Originally Posted by Henry Longmire

So, I am an investor in IGW which has lent money to Colwood at 12%, am I getting the full 12% or is there a fee they are taking for lending ...... Maybe that's why they call it InterGenerational Wealth, my grandkids will maybe get paid out when the project gets finished? Why is the OM so hard to understand. Creative financing or slight of hand?

You will get the full 12% IF they can build the project, or IF they find a greater fool to invest more money to pay your money back or IF they can get huge additional construction loans.

A high risk construction project.