Lake Austin Properties I, Ltd. – Fourth Update
The Future of the Grande Palisades and the Oversupply of Disney Area Condominium Hotels (Condo-Hotels)
On November 10, 2010 and April 25, 2011 Lake Austin Properties I, Ltd. announced that OSM and the investment groups Merchant Equity and SCS have agreed to a loan which will bring the Lake Austin Reserve out of foreclosure and allow it to be completed. This is positive news for Paul Oxley and those who stand to profit, or at least salvage their own economic interests, as a result of the completion of the Grande Palisades. However, it does not change the economic realities for purchasers who are still contractually obligated via their Agreement for Sale/contract to purchase a Grande Palisades (or other) unit.
The fact that the Grande Palisades (or The Avalon or Magnolia Woods Resort) may be completed, does not change the economic analysis and business decision for those who have contracted to purchase a unit in the Lake Austin Reserve. The fact remains that the value of the units, assuming they are completed and Lake Austin Reserve is operational (meaning the amenities and ability to generate rental income are in place), appears to be a mere fraction of their contracted for price. Equally important to valuation, purchasers must consider the net rental income (actual rental rate times the occupancy rate less management fees), home owners association (HOA) fees, property taxes, property insurance, maintenance/upkeep and, if financed, principal and interest payments.
A directly on point example is the completed 99 unit The Palisades Resort phase of the Lake Austin Reserve development by Lake Austin Properties I, Ltd. (which is located in the same development as the Grande Palisades, Avalon and Magnolia Woods Resorts). The Palisades phase was completed in 2008. However, only about half of the units have been sold. The fact that The Palisades phase of the Lake Austin Reserve is still not sold out, after being fully completed for over two years, should be a strong indicator of the economic viability of the Grande Palisades phase of the Lake Austin Reserve, or lack thereof. For photographs and actual video footage of the Lake Austin Reserve as of May 10, 2011 follow the links below:
- Grande Palisades
- Lake Austin & Bahama Bay
- Grande Palisades & Palisades
- Grande Palisades
- Grande Palisades
- Fly Over Video
Another directly on point example is the completed 200+ unit Caribe Cove Resort development by Maesbury Homes, Inc. (another IAP marketed Paul Oxley led condominium hotel development). In the Caribe Cove Resort the rental guarantees have not been honored and units, many of which were purchased primarily by United Kingdom based investors for over $300,000.00 each, are now selling in the $60,000.00 range. This is a real world example and involves a fully operational resort. It is also important to note that the Caribe Cove Resort is located approximately two miles south of the Lake Austin Reserve and the units are approximately the same average size as Grande Palisades Resort units.
Another directly on point example is the completed 400+ unit Bahama Bay Resort development by Maesbury Homes, Inc. (another IAP marketed Paul Oxley led condominium hotel development). In the Bahama Bay Resort the rental guarantees have not been honored and units, many of which were purchased primarily by United Kingdom based investors for over $200,000.00 each, are now also selling in the $60,000.00 range. This is another real world example that involves a fully operational resort. It is important to note that the Bahama Bay Resort is also located a few miles south/southwest of the Lake Austin Reserve and the units are approximately the same average size as Grande Palisades Resort units.
Another directly on point example is the partially completed 400+ unit Bahama Bay II Resort development by Maesbury Homes, Inc. (another IAP marketed Paul Oxley led condominium hotel development). The Bahama Bay II Resort is also just a few miles south of the Lake Austin Reserve and the units are also approximately the same average size as the Grande Palisades Resort units. The Bahama Bay II development is in foreclosure, will never be fully completed, and a court appointed receiver has been appointed to take control of the development from Maesbury Homes, Inc. You can read more about the Bahama Bay II Resort development via these previous articles:
- Bahama Bay II Condominium/Resort by Maesbury Homes, Inc.; Foreclosure Update – Thursday, August 26th, 2010
- Bahama Bay II Condominium/Resort; Update – Monday, August 2nd, 2010
- Bahama Bay II Condominium/Resort by Maesbury Homes, Inc. – Wednesday, March 17th, 2010
The economic reality is that the contemplated 890 Grande Palisades Resort C1, C2 and C3 units will be in direct competition with The Palisades, Caribe Cove, Bahama Bay and Bahama Bay II Resort units. In addition to the above referenced Lake Austin Properties I, Ltd. and Maesbury Homes, Inc. Paul Oxley condominium hotel developments, a number of other developments are further competition to the glut of units within the same west side of Disney area (not to mention the 1,000s of established units on the east side of Disney that are already struggling to remain economically viable given relatively low occupancy and rental rates).
As an example, the Liki Tiki Village development’s 650+ units are located a mere quarter mile south of the Lake Austin Reserve. As another example, the Orange Lake Country Club and Resort development’s 2,300+ condo-hotel units are located approximately one mile east of the Lake Austin Reserve and approximately one and a half miles from Disney’s west gate. As yet another example, the Westgate Resorts’ Westgate Vacation Villas & Town Center’s 2,500+ condo-hotel fractional ownership/timeshare condo-hotel units are located just one mile from Disney’s west gate.
The current and growing oversupply of condominium hotel units has already caused developments to go into bankruptcy protection as a result of occupancy and rental rates that are too low to sustain economic viability of the development (for example, the IAP marketed Lake Eve and the Mona Lisa at Celebration condominium hotel developments have already gone into bankruptcy protection).
Urban Thier & Federer P.A. encourages all purchasers to do their own independent due diligence and research. You can also learn more about Lake Austin Properties I, Ltd.’s Lake Austin Reserve Grande Palisades, The Avalon and Magnolia Woods Resort phases via these previous articles and updates:
- Lake Austin Properties I, Ltd. – Twelfth Update – Lake Austin Reserve Purchasers Secure Judgement
- InformationLake Austin Properties I, Ltd. – Eleventh Update – Lake Austin Announces Deal with Malbec Investments
- Lake Austin Properties I, Ltd. – Tenth Update – Urban Thier & Federer, P.A. Answers Lake Austin Reserve Purchases’ Questions in Person in the United Kingdom and Provides Factual Information
- Lake Austin Properties I, Ltd. Ninth Update – Lake Austin Properties I, Ltd., Raises Bankruptcy and Other Issues to Encourage Grande Palisades, Avalon and Magnolia Woods Purchasers to Continue with an Economically Unjustifiable Purchase.
- Lake Austin Properties I, Ltd. Eighth Update – Lake Austin Reserve Developer Visits United Kingdom to Propose REIT Concept
- Lake Austin Properties I, Ltd. Seventh Update – The Importance of Understanding Your Chosen Law Firm’s Litigation Strategy and Your Own Litigation Priorities
- Lake Austin Properties I, Ltd. Sixth Update – Lake Austin Joins Forces with IAP/IAP Global Veteran to Replace The Affinity Partnership, Ltd.
- Lake Austin Properties I, Ltd. Fifth Update – The Grande Palisades and Lake Austin Properties I, Ltd. High Pressure Tactics
- Lake Austin Properties I, Ltd. Third Update – Fuel USA and Affiliated Attorneys and Solicitors
- Lake Austin Properties I, Ltd. Second Update – The Affinity Partnership, Ltd. and Related Entities
- Lake Austin Properties I, Ltd. Update – Status of Buyers’ Deposits
- Lake Austin Properties I, Ltd. Grande Palisades, Avalon and Magnolia Woods – Status and Rights
We encourage all purchasers to interview any attorney that they may be contemplating to retain and to ask that attorney for their experience, record in this area of the law, number of cases taken to final judgment, number of cases affirmed on appeal, number of attorneys in the firm, firm staff, resources, etc. We sincerely believe that purchasers should not retain an attorney or law firm until they are confident that 1) the law firm has the experience and resources to represent their best interest and 2) they fully understand the law firm’s litigation strategy.
The Florida Bar, which regulates all attorneys who are licensed to practice law in the State of Florida, provides strict guidelines which prohibit us from referring to past successes or results obtained for other purchasers in this or other developments. However, we can provide you with this and other information in response to any inquiry. Accordingly, we encourage you to contact us via the “Contact Us” page and we will promptly respond with additional information.
With attorneys in Orlando, Florida, and Munich, Germany, Urban Thier & Federer, P.A. continues to assist buyers throughout the United States and European Union countries who are seeking to terminate their pre-construction purchase agreements. Most cases can be handled on a contingency fee basis (client is responsible for costs).
We encourage you to explore our website – www.urbanthier.com to learn more about Urban Thier & Federer, P.A., their attorneys and practice areas. Urban Thier & Federer, P.A.’s representation of buyers includes litigation of cases in state court, federal court and arbitration proceedings. We encourage you to become informed of your rights and options. You should also ensure that any law firm you consult or retain to represent you has the experience, resources and ability to take your case through trial and appellate courts, if necessary.
Please note that Urban Thier & Federer, P.A. does not represent you and cannot take any action on your behalf unless and until you enter into a formal written Legal Representation Agreement.
John L. Urban, Shareholder