Update

Sobu Homeowners,
The following is a long-winded update with regard to where things stand with the Sobu assemblage. As most of you know, the circumstances in the world make this about the worst possible time to be selling a $27 million dollar piece of development property. The stock market just hit the worst low point in 52 years, banks are literally going out of business, the real estate market is tanking and foreclosures are at the highest point in history, public builders are going bankrupt, developers are cutting back on employees and holding off on previously planned projects, oil prices have created a true crisis in this country and everyone is nervous about the pending election and who will be leading this country. Could it get any worse!



As you know, we have worked tirelessly in fourth quarter of last year to acquire 134 signatures from Sobu owners. We had an amazing response with certainly the majority of owners anxious to sign agreements to sell their condos. There was a tremendous amount of momentum during that time and together – with the help and participation of Sobu owners – we accomplished a miracle!



In order to market the property we listed it on Loop Net and another listing service that developers and commercial agents have access to. In addition to that, we sent over 80 packages out with information about the property to both local developers as well as out-of-state and international developers. We read the Atlanta Business Chronicle each week which is THE publication for what is happening in the commercial real estate business in Atlanta. Every article that mentioned projects going up with out-of-state or international developers gave us leads for developers who are interested in this market. We sent packages to every developer as we read about them being involved here in Atlanta. The bottom line is – everyone in the commercial world was aware of Sobu being assembled and “for sale”. The majority of this activity was in fourth quarter and like most businesses people slow down (if they work at all) from Thanksgiving until Christmas so things were slow.



By the time 2008 hit the economy was in a downward spiral and real estate was tanking.



Developers who in the past were able to borrow unlimited amounts for projects were all of a sudden faced with the inability to secure lending…especially developers wanting to build condos as our market in Atlanta is totally saturated. Depending upon what specific area you are in there are 2 – 3+ years of unsold condos on the market today. No bank in their right mind can lend to a developer wanting to build more of those. To give an example of how bad things are, there is a condo building at Lindbergh where construction has literally CEASED because the banks will not release any more funds until they pre-sale a certain percentage of units in the building. There are tens of millions already invested in the project and it has been stopped. That is detrimental…and we are seeing more of that here in the Atlanta market.



Even if Sobu were “for sale” at $15 million dollars right now there would be few – if any – developers who would be able to secure those funds.



We have invested an inordinate amount of both time and money into the Sobu assemblage and want more than anything for these times to turn around. You – as sellers – have gotten your hopes up at the prospect of getting out of your investment whole (and even making money on it!). Together we all want to see this sale happen. We are committed to this. The property will remain listed in the commercial listing services and we will continue to work any leads that we encounter. I believe that nothing will happen in 2008 because of the state of affairs in this country. However; one never knows! So – let’s continue to keep our hopes up and pray that a foreign investor will come in and make a speculative purchase. That is definitely a possibility.



We do have one group in particular who continues to circle back to us on Sobu with a strong interest. But - they are “weathering the storm” and are therefore in a holding pattern (as are most developers out there).



Our neighbor “The Streets of Buckhead” will really influence what the Sobu land is worth. The Streets of Buckhead is about 50 percent preleased, with the project's first phase set to open in November 2009. If this project is a huge success then developers will definitely look to neighboring or close-by sites such as Sobu. On the other hand, if that project does not lease out as projected it will be the indicator of what that interior Buckhead area can sustain. Let’s hope Carter’s project is a roaring success.



We hope that this has been helpful. We want to paint a realistic picture for you but we are hopeful that in 1st quarter 2009 our country might begin to make a come-back and we’ll be ready to sell with contracts in hand. Please go to the Atlanta Business Chronicle website (or weekly publication) for articles and information about the Atlanta commercial real estate industry. Thanks to everyone at Sobu.

http://www.bizjournals.com/atlanta/stories/2008/06/23/story1.html?b=1214193600%5E1653656