Couple of days ago I wrote about my Russian client, who was hit hard when the ruble plummeted, successfully slashing the value of his holdings in half.
Well, that is sort of personal story as well, as going with the development here was a dream… and now nobody knows what would happen. Most probably when our market would go crazy, my client would sell his land and forget great plans.
But there is a much bigger story in Daytona, in which I personally am not involved, but which has a profound effect on Daytona.
Couple of years ago, when everybody thought that we were out of the slum, a few major projects were announced. Nearly a billion-dollar project One Daytona by NASCAR, Hard Rock Hotel and Café, Westin 4-star hotel, and 2 high-rise towers by Protogroup, a company from Russia.
“The project — which includes 501 hotel rooms, 122 condo units and a parking garage with 517 spaces — ran into a snag with financing everything at once, according to those working on the venture that will be the most expensive beachside development in the city's history if it comes together as planned.” (read more here)
It is a $135 Mil project in the heart of Daytona’s Beachside. The most expensive beachfront development in Daytona’s history. 27-storey South Tower and 31-story North Tower Daytona Beach Resort Hotel and Condominiums. Ballroom for 500 people, meeting space, restaurants, retail, pools, fitness center… you name it.
Protogroup owns a hotel in St. Petersburg, Russia. The owner bet on Russian money when buying land and coming up with the project. And then one delay after another, one change after another made many here skeptical.
But when the ruble collapsed, it became obvious that Russian money was gone. Everybody, who was familiar with what happened in Russia, thought it was a failed deal.
Turned out they were not far from the truth. Russian money was gone. Protogroup turned to American sources of funds, and learned the hard way, that you can’t finance condo without preselling more than half of them. And at the price point, the developer would like for these condos, it is probably unrealistic today.
They approached the City and the County and asked for phasing the project with the last leg to complete in 2021.
My understanding is that in stagnant Daytona market, the developer would get the extension, and garage will be built first starting in 2017, then a Hotel would start in 4 years, and the condo in 5 years and complete the project in 6 years. Unless, of course, something else pops up, and another delays become imminent...
Of course, initial plan to start in 2015 and do the whole project in 2 years was better, but hey… after all the delays already, this doesn’t sound too bad.
This is what a weak ruble has done to Daytona Beach.
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