If these folks have half a brain (ok, that’s a leap considering they built this thing when they did – but I digress), they will lower the list prices by 30%-ish to get sales up to the Fannie/Freddie threshold. They’ll earmark the upper floors (or certain blocks of floors) for buyers and then they’ll hold onto the remaining units (on the other floors) as rentals. There’s no hope of this project turning a profit at this point, so they have to accept that and focus on the goal of mere non-complete-debacle. My bet is they can get their lender to write down 10%-20% of the loan’s principal balance, sell units to pay down a big chunk of that principal, and refinance the rental units as a group into a huge multi-family mini-perm loan at 5.5% over 10 years (courtesy of agency financing). So, yeah, everybody loses… but they lose a hell of a lot less than if they pretend that they can actually sell all of those units at anything even resembling a list price. If they’re not already going down this road then they shouldn’t be in the development business.
