The Sails Pattaya

[Goldbug]

After trying to maintain an optimistic attitude to my investment in The Sails Pattaya, I now accept it as the worst investment of my life.

As we know, Lehman Brothers now owns most of Grand Asset Hotels and Property pcl, which I thought would have injected some much-needed cash to finish the project - and my condominium.

Unfortunately it is now "Crunch Time At Lehman Brothers" (The Sunday Times, U.K., 24 August 2008) and it seems that they are now almost bust. This is despite the Lehman Chairman, Richard Fuld Jr firing off a memo to his 25,000 staff saying that work is in progress to "protect the firm from further market dislocations". This sounds like Alan Greenspan-speak for "everything is going fine" but really means "We're Bust".

Lehman's "problematic mortgage assets" meant $9 billion of write-downs in the past year. Meanwhile the bank is still strangled by $75 billion of leveraged loans, mortgage assets nobody is interested in, and commercial-property investments it is desperately trying to off-load. Analysts are forecasting upcoming third quarter results with another $3 billion in write-downs, with the worst still to come.

Lehman sold off $147 billion of assets during the second quarter, but it still has the highest exposure to American mortgages on Wall Street. It's $40 billion commercial-property book is twice the size of Morgan Stanley, Merril or Goldman. Just as I have just taken a 20 per cent hit on the recent sale of my apartment in England, Lehman faces having to sell its massive property portfolio into a declining market, which could mean another 30 per losses from the balance book. Grim reading.

Lehman shares have plunged 85 per cent since their peak last year, which is the worst for any other broker or investment bank on Wall Street or London. The company is now estimated to only be worth about $10 billion, with shares last Friday changing hands at $14.

But could there be some light at the end of the tunnel? At $10 each Lehman would be cheap and worth a punt. Rumour has it that South Korea and Chinese investors are set to buy 50 per cent of Lehman and scoop up a massive property portfolio at a knock-down price.

Here we go again, but this time I'm pretty sure that the Koreans and Chinese have the funds available to invest, and they, unlike the West, had little or no exposure to the sub-prime mortgage debacle.

Although I don't see myself moving into my condominum unit to meet Grand Asset's new schedule of early 2010, with Le Meridien Hotel to be completed at the end of 2010, there is at least a chance that the massive foundations might be used sometime in the future. Whether I will be here or not is another question.

[glyph]

"Grand Asset", or whatever they call themselves today, has been struggling with its Bangkok developments for 4 years. With that knowledge, I can't imagine anyone anywhere buying into one of its developments. "Due diligence" is not just a clever phrase, it's mandatory.

[quiksilva]

Yes I'm afraid that Lehman's likely fate is a hot topic in the industry right now. I can't go into details but an awful lot of their recent investments in the residential and hospitality sectors would not look good.

Now add their global problems into this mix and its very difficult to see anything positive on the immediate horizon, even if these new buyers do come in and especially if they undertake thorough due diligence studies.

[steveromagnino]

Yes I'm afraid that Lehman's likely fate is a hot topic in the industry right now. I can't go into details but an awful lot of their recent investments in the residential and hospitality sectors would not look good.

Now add their global problems into this mix and its very difficult to see anything positive on the immediate horizon, even if these new buyers do come in and especially if they undertake thorough due diligence studies.

You are also talking about the double whammy factor in the Regents with K-Tech their main contractor also on the skids.

Who has done the first part of the work for the Sails?

Knowing that area quite well, I would not have thouht you could leave structural steel in the salty environment for more than a year or so without losing at least 50% of its strength. 2-3 years and you might as well tear it down and start again.

[Humphrey Bear]

Knowing that area quite well, I would not have thouht you could leave structural steel in the salty environment for more than a year or so without losing at least 50% of its strength. 2-3 years and you might as well tear it down and start again.

If the structural steel is in course of erection / stalled. then it will not be properly coated yet and thus very susceptible to corrosion.

I have not been down to that area for months now, do not know the stage of construction, but it is proabale that it would be a 'start-again' scenario, using the same massive foundations - or scrap the whole project. Either way - big problems.

[Goldbug]

Knowing that area quite well, I would not have thouht you could leave structural steel in the salty environment for more than a year or so without losing at least 50% of its strength. 2-3 years and you might as well tear it down and start again.

If the structural steel is in course of erection / stalled. then it will not be properly coated yet and thus very susceptible to corrosion.

I have not been down to that area for months now, do not know the stage of construction, but it is proabale that it would be a 'start-again' scenario, using the same massive foundations - or scrap the whole project. Either way - big problems.

Oh Well - that was short-lived! The Korean Development Bank who were interested in buying a 50% share in Lehman have pulled out to concentrate on supporting the Won. Now Lehman's best hope is that a Soveriegn Fund might buy them.

[JRinger]

...Lehman is/was the financial back of Surin Beach Resort. I remember they were upgrading to 5 Star a year or so ago.

Stayed there one while they 'under construction' and you could hardly enjoy your lunch if there was any wind at all coming from the pig farm next door...apologies if off-topic a bit...

[moo9]

The project might be as dead as the Lehmann brothers....

[Pdaz]

Yep another one bites the dust.......

Ocean 1...... Nothing

The Sails...... Nothing

Wonder which ''luxury Condominium'' project will be next the non-starter list...?

I'm off to Foodland to get the latest copy of the Pattaya Real Estate rag.....

[prefabs]

Yep another one bites the dust.......

Ocean 1...... Nothing

The Sails...... Nothing

Wonder which ''luxury Condominium'' project will be next the non-starter list...?

I'm off to Foodland to get the latest copy of the Pattaya Real Estate rag.....

Waste of time reading it, worst it will say is "minor difficulties" due to the political situation, or some such rubbish. It is the same with all the local English language newspapers which are mouthpieces of the real estate agents.

[triffid]

I believe grande asset's connexion with lehman is that a lehman managed fund owns a substantial stake in it. If true this is surely rather different from lehman itself having a share ownership. In any case isn't the real question whether lehman's stake can/will be sold to an investor, and whether grande asset's management (under current or new ownership) can/does raise the finance to finish the project? It is likely of course that finance - if obtainable - will be harder to get and more expensive without the association of a hitherto prestigious name in the ownership. Tje outcome will presumably be clearer in the coming weeks.

[prefabs]

I believe grande asset's connexion with lehman is that a lehman managed fund owns a substantial stake in it. If true this is surely rather different from lehman itself having a share ownership. In any case isn't the real question whether lehman's stake can/will be sold to an investor, and whether grande asset's management (under current or new ownership) can/does raise the finance to finish the project? It is likely of course that finance - if obtainable - will be harder to get and more expensive without the association of a hitherto prestigious name in the ownership. Tje outcome will presumably be clearer in the coming weeks.

It has "presumably" been clear for a while now. Sails, Spinnaker, Ocean Tower 1 were all figments of con men's imaginations, designed to temporarily instill some life into the dying embers of the Pattaya Property Boom

[jojothai]

whilst previous investors will lose out, there is no need to think the sails is dead. maybe it will emerge under "resailes".'TITit would be useful to know how much they built already. continuing from existing construction has its problems but depends on what was done. I believed the previous manager left and has his own company interested in the area. not sure on any facts but might be worth keeping an eye on developments. the location is still very good long term - until global warming takes over. that's another thing to consider!jojo

[RAZZELL]

The company is now estimated to only be worth about $10 billion, with shares last Friday changing hands at $14.

Funny that, last night on the BBC news it said top execs were paid $6 billion in bonuses last year

RAZZ