River Landing fat lady refuses to sing
Lake Placid Developments CEO Michael Lobsinger appeared before Saskatoon City Council last night and made an appeal seeking resurrection of a deal his company had made with the city to purchase “Parcel Y” in Saskatoon’s Central Business District. Lake Placid had plans to build River Landing Village, an upscale hotel and condominium development. That deal died on October 30 of last year when the company failed to meet the payment deadline for the land following a number of extensions granted by the city. Lake Placid ultimately faced challenges in securing financing for the project after the global economy went south and lenders tightened the purse strings.
So, what has changed and why should we care?
Well, most importantly, the money is reportedly in the bank according to Lake Placid’s new partner, Dr. Karim Nasser who also attended the council meeting and provided assurances that he has the goods to immediately deliver up full payment for the parcel and to see the project through to its completion. Dr. Nasser is best known to be a respected professor and a generous philanthropist having donated $12 million dollars to the University of Saskatchewan. That kind of gesture should provide some assurance that the guy has access to cash. People don’t often give $12 million bucks away, and those that do probably feel some measure of confidence that money won’t be a big problem for them in the future. I think this guy is the real deal.
Also on hand at last night’s meeting was Manilo Marescotti, vice president of development for Marriot Hotels. Mr. Marescotti has indicated publicly that Saskatoon is a “development priority” for the upscale chain of hotels, and more importantly, that the chain is keenly interested in this particular development. This also strikes me as good news, and if I may say so, a darned good fit for this awesome project.
So what’s a city council to do?
After all, they did give Lake Placid its very “last chance” back in August of 2009 with a pay up or get lost kind of ultimatum, and who can blame them for that? At almost every given moment through the final months of the last chapter, Lobsinger claimed that Lake Placid was just days away from coming through with the cash. He said it like he believed it. I suspect he probably did. Still, council could only stand behind the guy for so long before they all started to look like clowns who had completely misread the situation. They finally dropped Lake Placid like the proverbial hot potato and brought Parcel Y back to the drawing board seeking new appraisals and beginning preparation for a new “request for proposals.” They had little choice at the time.
But…but…here he his again and this time he apparently has the cash!
I say, “Take the money baby! Take the money and run!”
Why?
1. Well, for starters, Saskatoon could really use another $200 million dollar project right now, and apparently cash is still hard to come by, at least at the quarter billion dollar level.
2. We’ve been trying hard to get something going on this land for a long, long time. Starting the process from scratch could easily take another 3 years, if someone else steps forward who wants to take a bite of this one. If it fails again, you and I could be long gone before this parcel sees further improvements. We’ve already jumped through the hoops to make this deal fly. What realistic benefit could we see by turning this opportunity away? It seems like a big risk to float given the history of “Parcel Y.”
3. Lake Placid has an ultra cool plan that has already been approved for the site and it appears that they’re ready to turn some dirt. In the world of $200 million developments, it doesn’t get much better than that.
4. The other guys don’t appear to be lining up to stake a claim. I mean, for goodness sakes, 200 million dollars doesn’t grow on trees, ya know?
5. Michael Lobsinger deserves this project. I know he really pissed us off when he kept promising to show up with the cheque but this is what we ought to expect from passionate people who put everything they have into really big ideas. They get so deeply invested that they can’t accept that they might fail. This is the kind of brain that you must have to get huge projects like River Landing Village off the ground. This is the kind of spirit and determination that it takes to crack tough nuts and do big stuff. Those failed promises weren’t lies. They were the words of a committed man who had already invested millions of dollars and hundreds of hours. Lobsinger is the kind of person who has the ability to believe even when he’s facing of the worst kinds of adversity, and that’s exactly what he faced when we fell into what many have called “the greatest financial crisis since the great depression.” And, while we were busy kicking him back to Calgary, telling him that the deal was dead, and that he’s a deadbeat, he was still getting up every day looking for $200 million dollars. He still believed that he could pull this thing off. That takes a lot of guts! There’s a certain coolness factor to that, so I love this nearly perfect ending.
Sure, let’s make them pony up with today’s fair market value. Let’s have a look at those books and make darned sure these people can pull this thing off. Let’s double check, and heck; let’s even have our smartest accountants count the cash. If and when we’re satisfied that they can do it, let’s let them go build us a village.
More from the Star Phoenix
Lake Placid still in contention for River Landing development
I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call or email.
Norm Fisher
Royal LePage Saskatoon Real Estate
11 comments so far. We'd love to hear your thoughts.
March 23rd, 2010 at 8:57 PM
If Dr.Karim Nasser is set to chip in with this project the city better not let this opportunity get away. When I was in school myself and my best friend had the opportunity to sit down with Dr.Nasser, he is a very smart man and has made everything he has on his own. He never received hand outs and if he puts his name and cash down on this project I have to believe it will be very successful and will be followed thru till the end. Also with a big development like that going up downtown it does nothing more than drive up the downtown real estate prices; considering I finally purchased a condo downtown I love that
March 24th, 2010 at 1:03 PM
Lol. Wes, you’re a funny guy!
I have not had the pleasure of meeting Dr. Nasser but I have heard good things about him, and yes, he must be one smart dude!
March 24th, 2010 at 1:44 PM
While I agree with pretty much everything you just outlined, I’m not sure it’s worth it for the city to get sticky in the fair market value arena, in my opinion simply confirm the cash is available and get this project underway, or I suppose we could wait, and wait, and wait and maybe a decade or two from now the planets may realign and another nearly as nice idea will come along..
March 24th, 2010 at 9:47 PM
Hi Brian,
Thanks for the comment. It’s nice to hear from you.
You make some good points. I think we’ve been two or three decades getting this far. It would be a shame to be right back to square one. I don’t even really know of there would be much change in the market value as I don’t follow that kind of real estate but I’m guessing this buyer would be pleased to pay fair market value if it has gone up. Maybe it’s worth less? I certainly don’t think there are more buyers for this kind of property than there were a couple of years ago.
March 25th, 2010 at 11:19 AM
I’m still curious in lieu of the changes April 19 and whether we have the market to sustain several hundred additional condominiums. It’s probably a smart play; if the project fails to go ahead (again) for whatever reason I believe the city repurchases the land.
March 25th, 2010 at 3:01 PM
Not to diminish the Nassers’ generosity but it is not a $12 million cash donation. Here is the Star-Phoenix article:
“The donation works like this: The Nasser family is donating four buildings, worth a combined $18 million, to the university, and the U of S will hand back $6 million in exchange.
The property includes three buildings on the 800 block of Idylwyld Drive — two apartment buildings with a total 77 suites and a 13,000-square-foot commercial building — and the Vienna Building downtown at the corner of Third Avenue South and 20th Street. The Vienna building houses several commercial tenants as well as the downtown office of the Edwards school of business.”
As I recall from an earlier article, the apartment buildings were to be converted to condos but the project was cancelled.
This is a great way to divest (underperforming) assets and receive a tax deduction.
March 26th, 2010 at 1:28 AM
Why does this group/design have a monopoly on that site?
Nasser got a $5 million kick back for his “donation” to the U of S,
now has $5 million to invest. How altruistic is that.
They broke their contract, time to open up to a fair and open process.
March 26th, 2010 at 10:56 AM
Hey Skeptic, why do you put “donation” in quotes like that? There’s absolutely nothing shady about what he did! He traded the university $18M worth of buildings for $6M cash. They’re calling it a $12M donation because it’s obvious he didn’t get fair market value for his properties. It’s like a dad selling his son a car for $1 – yes it’s a sale but the price is nowhere near the value of the assets traded.
Nasser, like any other millionaire businessman, doesn’t have millions of dollars sitting in a bank account – that’s a waste – he has them tied up in investments like property. Whether converting the property to cash and giving it to the university, or just giving the properties themselves, it was a tremendously generous thing to do. And by making it such a sweet deal for the university, he avoids the hassle of actually trying to sell the buildings himself.
Yes he got money back, that’s a smart business move. He freed up a bunch of liquid cash (absolutely for the sake of partnering with Lobsinger) and made a nice donation to the university at the same time. What’s shady about that? It’s smart business sense (hell, it’s common sense) and generosity!!! So many naive conspiracy theorists on the S-P website claiming he’s “up to something”. Get a grip – you’re simply pointing out the obvious.
March 26th, 2010 at 1:44 PM
Why don’t they just sell the land with tight conditions?
Agreed that waiting around and allowing only one group to develop this property, the first time around without even paying for these rights, is ridiculous.
Sell it at auction with conditions and see how much they make.
March 26th, 2010 at 2:25 PM
Nick,
I believe they did actually pay up by delivering the interest that was due just prior to the default on the final payment. I also assume there was a deposit that was forfeited. Someone correct me if I’m wrong.
Auction? That’s very good Nick.
Skeptic,
Monopoly? Fair? Who else is interested?
March 26th, 2010 at 3:22 PM
Norm great points. I agree, city council should go for it. There is really nothing new downtown that has been built, hotel wise ( some renovations, KG,etc ) in what 20 years? The Radisson was the last big hotel built here in the 80′s.
No disrespect to the Bessborough and other hotels, but having a brand new 200 million dollar hotel project will not only create jobs now and into the future, it will also draw more investment here.
On a different note, I see that there are HST rumblings for Saskatchewan. There is only one thing worse than being taxed and that is being taxed more.
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