In defense of the City Creek Center

[Tacenda]

18 hours ago, Ouagadougou said:

The building of the CCC actually reminds me of this scripture in the BoM:

Mormon 8:

"37 For behold, ye do love money, and your substance, and your fine apparel, and the adorning of your churches, more than ye love the poor and the needy, the sick and the afflicted."

Just change out "churches" with "malls"...

Yep! But do know the church is both realities. Sometimes, my eye is drawn to the 'adorning' going on, and believe more can be done on the 'poor and needy side'. Sure the church doesn't want to enable, but recently I've seen how difficult it is for the poor to even get a step up without some help, the church does help, but how much more is my question. 

[mfbukowski]

5 hours ago, rockpond said:

Nothing to "refi" since the church put in cash.

They, conceivably, could put the property up as collateral for a new loan but that would require an abandonment of their long held principal of not having any debt. 

And it would also depend on the project's success.  And we don't know what kind of financial success the project is having.

Banks won't enter the deal unless the risk of foreclosure has been absolutely minimized. 

I am in that business.

Of course the church would never need more liquidity but the hypothetical was put forward - what would they do if they needed to raise money instantly-

The answer is that they would get a loan against City Creek.  Banks do not even make loans like that- they would get it from an insurance company typically or an individual like say a Trump or Bill Gates or whoever.  That would be investment grade paper.  Lenders would be coming out of the woodwork to get their hands on such a loan, probably a REIT would be formed to fund it, so Wall Street itself might be among those standing in line.

And yes, they would be hoping they could foreclose and get the property back far below market value.

Banks have liquidity requirements so no, they would not make the loan because if it failed the bank might be out of business.   But investors would WANT it to fail or they would not have made the loan in the first place.  They win either way- get their money back plus interest or get the property at a bargain price.

The long held principle presumably would have to be abandoned if they needed the cash badly enough.  But that was the assumption of the question- "WHAT IF" they suddenly needed cash.  They have all the cash they need and more- that is the way the church works.

It was a silly question in the first place.

You can structure a loan anyway you like- interest only, balloon payment at the end, negative amortization- whatever works between the parties.  You just do a net present value calculation and structure the interest rate any way you want.

This has no resemblance to going to a bank to get a loan on your house.

Edited March 26, 2017 by mfbukowski

[rockpond]

2 hours ago, mfbukowski said:

I am in that business.

Of course the church would never need more liquidity but the hypothetical was put forward - what would they do if they needed to raise money instantly-

The answer is that they would get a loan against City Creek.  Banks do not even make loans like that- they would get it from an insurance company typically or an individual like say a Trump or Bill Gates or whoever.  That would be investment grade paper.  Lenders would be coming out of the woodwork to get their hands on such a loan, probably a REIT would be formed to fund it, so Wall Street itself might be among those standing in line.

And yes, they would be hoping they could foreclose and get the property back far below market value.

Banks have liquidity requirements so no, they would not make the loan because if it failed the bank might be out of business.   But investors would WANT it to fail or they would not have made the loan in the first place.  They win either way- get their money back plus interest or get the property at a bargain price.

The long held principle presumably would have to be abandoned if they needed the cash badly enough.  But that was the assumption of the question- "WHAT IF" they suddenly needed cash.  They have all the cash they need and more- that is the way the church works.

It was a silly question in the first place.

You can structure a loan anyway you like- interest only, balloon payment at the end, negative amortization- whatever works between the parties.  You just do a net present value calculation and structure the interest rate any way you want.

This has no resemblance to going to a bank to get a loan on your house.

Actually, the question that was asked was different.  I asked it in response to the claim that CCC was a great way for the church to lay up funds for a time of need.

So, I asked not just how the funds would be extracted from City Creek (to which I guess your answer is that they would drop a long-standing principle of no-debt and put the asset at risk)...

But I also asked what kind of situation would create both the need and the ability to access the funds simultaneously.  I understand the value of real estate as an investment but I don't see it as a good tool for keeping funds that you'll need to access in case of some kind of emergent need.

 

[CV75]

On 3/17/2017 at 1:16 PM, MormonVideoGame said:

In our opinion: City Creek Center visionaries and developers deserve a round of applause By Deseret News editorial board

I think the mall was a good idea because it helped the economy, and created many jobs which help the poor. 

Will the church ever fund similar projects in poor countries like Mexico, Brazil, Ghana? or at least in poor USA cities like Detroit, Michigan. Fresno, California. El Paso, Texas. Flint, Michigan. Memphis, Tennessee? 

This is the opinion of the editorial board, which has decided to limit its observations to the city level. Personally, I think the project is an example of “Think global and act local,” a concept which originated as a city planning philosophy in the early 1900s and was later applied to the environmental movement in the 1970s.

It is interesting to me that Bishop Burton, who is credited with making City Creek Center happen, also promoted the idea of green / eco-friendly meeting houses.

http://archive.sltrib.com/story.php?ref=/sltrib/money/53826007-79/burton-church-lds-lake.html.csp

I think the Church would be inclined to invest wherever a community would be receptive to, accommodate and sustain a Church-funded economic project; the benefit would have to work both ways in order to be an authentic “Think global and act local” proposition. So far it seems humanitarian approaches have been more attractive and mutually beneficial, and the Church has invested in these ventures.
 

[CV75]

21 minutes ago, rockpond said:

I understand the value of real estate as an investment but I don't see it as a good tool for keeping funds that you'll need to access in case of some kind of emergent need.

[rockpond]

27 minutes ago, CV75 said:

That's funny.  Anyone here think the LDS Church is short on real estate holdings?

[CV75]

12 minutes ago, rockpond said:

That's funny.  Anyone here think the LDS Church is short on real estate holdings?

I'm not convinced the Church is noticeably short on any aspect of her portfolio. I would not count meeting houses and temples and so forth as intentionally strategic real estate holdings but part of the high cost of carrying out her mission, and maybe in the same sense as humanitarian aid.

… Construction and maintenance of facilities *ka-ching* $X

… Social welfare and relief *ka-ching* $Y

… Education *ka-ching*  $Z

 

Exaltation? Priceless

[mfbukowski]

3 hours ago, rockpond said:

Actually, the question that was asked was different.  I asked it in response to the claim that CCC was a great way for the church to lay up funds for a time of need.

So, I asked not just how the funds would be extracted from City Creek (to which I guess your answer is that they would drop a long-standing principle of no-debt and put the asset at risk)...

But I also asked what kind of situation would create both the need and the ability to access the funds simultaneously.  I understand the value of real estate as an investment but I don't see it as a good tool for keeping funds that you'll need to access in case of some kind of emergent need.

 

I am not the one who said it was or even asked such a silly question.

Real estate is the worst possible investment for cash needs. You might as well have asked what would happen if it was necessary to fly all of City Creek to the moon, yet I answered the question ridiculous as it was.

And yes, it is an excellent investment for producing income for future needs and could be sold later after a period of appreciation in commercial real estate.  Shopping malls can produce cap rates up to 10%- where else can you get that kind of return with safety??  That was in 2013, but there has not been an appreciable change since then

http://annualreview.cushwake.com/downloads/04_cap_market_report.pdf

Edited March 27, 2017 by mfbukowski

[rockpond]

1 minute ago, mfbukowski said:

I am not the one who said it was or even asked such a silly question.

Real estate is the worst possible investment for cash needs. You might as well have asked what would happen if it was necessary to fly all of City Creek to the moon, yet I answered the question ridiculous as it was.

I agree... That's exactly what I was pointing out with the question I asked.

[rockpond]

1 hour ago, CV75 said:

I'm not convinced the Church is noticeably short on any aspect of her portfolio. I would not count meeting houses and temples and so forth as intentionally strategic real estate holdings but part of the high cost of carrying out her mission, and maybe in the same sense as humanitarian aid.

… Construction and maintenance of facilities *ka-ching* $X

 

… Social welfare and relief *ka-ching* $Y

 

… Education *ka-ching*  $Z

 

 

 

 

 

Exaltation? Priceless

 

There are actually quite a few meetinghouses and temples that sit on valuable property.  And could be easily converted to commercial use.

But even if you eliminate temples/meetinghouses, the church still owns incredible amounts of real estate. 

[CV75]

13 hours ago, rockpond said:

There are actually quite a few meetinghouses and temples that sit on valuable property.  And could be easily converted to commercial use.

But even if you eliminate temples/meetinghouses, the church still owns incredible amounts of real estate. 

Anything is possible, of course, but the use of those structures and properties is not commercial, and there is no indication that they will be converted into commercial use. What else does the Church own "incredible amounts" of, or lack sufficient amounts of? Is there a suggestion that the Church's financial portfolio is out of balance for teh purpose of meeting her best interests?

[rockpond]

40 minutes ago, CV75 said:

Anything is possible, of course, but the use of those structures and properties is not commercial, and there is no indication that they will be converted into commercial use. What else does the Church own "incredible amounts" of, or lack sufficient amounts of? Is there a suggestion that the Church's financial portfolio is out of balance for teh purpose of meeting her best interests?

For the purpose of meeting her best interests?  I guess it depends on what you feel those best interests are.

My comment was in reference to the "diversify" meme.  I think all evidence points the Church having sufficient real estate investments.  Even without CCC.

As to what they might lack?  Who knows... the corporation sole doesn't share that information with us.

[CV75]

1 hour ago, rockpond said:

For the purpose of meeting her best interests?  I guess it depends on what you feel those best interests are.

My comment was in reference to the "diversify" meme.  I think all evidence points the Church having sufficient real estate investments.  Even without CCC.

As to what they might lack?  Who knows... the corporation sole doesn't share that information with us.

There are investments like CCC an there are investments like chapels and temples, and there are spiritual (religious, humanitarian, social) and temporal (financial, humanitarian, social) objectives in each, which may not always be identical but are certainly congruent and aligned and part of a balanced portfolio.

[clarkgoble]

On 3/25/2017 at 4:55 PM, Ouagadougou said:

The building of the CCC actually reminds me of this scripture in the BoM:

Mormon 8:

"37 For behold, ye do love money, and your substance, and your fine apparel, and the adorning of your churches, more than ye love the poor and the needy, the sick and the afflicted."

Just change out "churches" with "malls"...

I confess I don't see that, although I can understand why some want the Church to invest less and focus more just on care for the poor. Clearly the Church does a lot for the poor, but in my view that can't be the only concern. I think given the shift in membership to primarily being outside of the US that within a decade or so the Church will have serious expenses for these other Saints. That means planning now.

Also realize that the terrible fiscal management of the Church in the 1960's is still fresh in the minds of many of the Brethren. The Church has frequently been near financial disaster in the past. I can understand them falling on the side of caution. Likewise most of the Brethren almost certainly remember the decay of downtown SLC and don't want a repeat of that. Strip clubs within a block of the temple isn't something they want to see again.

While it's completely fair to prefer different choices, I'm afraid I don't buy in the least the idea that the Church is ignoring the poor.

[rockpond]

2 hours ago, CV75 said:

There are investments like CCC an there are investments like chapels and temples, and there are spiritual (religious, humanitarian, social) and temporal (financial, humanitarian, social) objectives in each, which may not always be identical but are certainly congruent and aligned and part of a balanced portfolio.

I agree but we have no idea what the mix of the total Church portfolio is... How much is invested in CCC, 111 Main, the Philadelphia high-rise, Florida's Deseret Ranch and future city, Irving Texas apartments, the Riverton development, etc?  Compared to how much is owned in real estate held for spiritual use... and what the other investments are that provide a return for the church.  Too many unknowns for anyone to declare that we needed CCC for portfolio diversity.

[CV75]

3 hours ago, rockpond said:

I agree but we have no idea what the mix of the total Church portfolio is... How much is invested in CCC, 111 Main, the Philadelphia high-rise, Florida's Deseret Ranch and future city, Irving Texas apartments, the Riverton development, etc?  Compared to how much is owned in real estate held for spiritual use... and what the other investments are that provide a return for the church.  Too many unknowns for anyone to declare that we needed CCC for portfolio diversity.

I'm not seeing anyone declaring such a thing (and the Church has stated her reasons for CCC)... But what is the problem with you not knowing all you wish to?

[rockpond]

15 minutes ago, CV75 said:

I'm not seeing anyone declaring such a thing (and the Church has stated her reasons for CCC)... But what is the problem with you not knowing all you wish to?

It was earlier in the thread.

I didn't state there was a problem with me not knowing all I wish to.  Just that there is no way for anyone here to claim that CCC is needed for the Church's portfolio diversity.