Boardwalk at Bricktown / Dream Hotel

[aDark]

As I had previously pointed out, Matteson had been the lead on a proposed Quicksilver Surf Hotel in Palm Springs, which completely collapsed. He had also proposed the same type of development in about a half dozen other cities that never materialized.

So I would label this statement as categorically false, and yet another hit to Matteson's credibility:

I've followed this thread and learned a lot thanks to many contributors speaking up and sharing their knowledge about commercial real estate. It sure sounds like this tower never happens and that OKC is being set up to be another failed development in Matteson's list.

Can someone enlighten me on the "how" aspect Matteson's game? Assuming, as Pete and others have made clear, this guy isn't the success story he claims to be, how is he going to enrich himself or others from this scheme? Is it s as simple as attracting investors to throw in money and then find an excuse (low leasing numbers) to not build the tower.... profit? How does the scam work, procedurally?

[Pete]

^

I believe he's playing the "fake it until you make it" game.

He's trying to at least pull off the three towers and he has to raise a ton of investor money to do that, and what typically happens (like at Sunset Amphitheater), they get a friendly architecture firm to draw up some sexy renderings with a promise to use them on the project, goes before a municipality and tries to get public subsidies, recruits a few investors and immediately spends their money on more renderings, PR, and marketing, then hope enough investment money flows in to keep things moving forward.

I was told that on a project of this magnitude, the A&E drawings alone would cost millions. And you can't file for a building permit until those are ready to go. They would have to engineer and design the entire site at the jump since there will be shared parking structures and so much crammed on a relatively small site.

At the same time, any lender is going to require that a good percentage of the investor funds are in verifiable accounts, and perhaps one building can get started but until it reaches a lease threshold, no way the rest of the loan money is provided for the next structure.

And the loans are often of the construction variety, meaning they are short term and then only when they have proper cash flow can they seek permanent financing which also pays off the construction loans.

[gopokes88]

Several people noted that in that OETA segment, Matteson said he had the "entire project" financed which had to include Legends Tower.

From the Oklahoman:



So, according to Matteson, he has raised all $1.5 billion in advance. For the tallest building in the U.S. to be built in a Bricktown Parking lot next to a Uhaul storage building.

BTW, no way $1.5 billion is going to be anywhere close to enough given the scale of this project. In today's dollars, Devon Energy Center - one 50-story building with some low-lying structures -- cost almost $900 million. So, THREE 34-story luxury buildings PLUS another 134-story tower would only cost 50% more? That's 236 total floors vs. 50.

134 stories??? That would be substantially more occupied floors than the current U.S. leader: Willis Tower at 108. 134 floors would place it second in the WORLD only to the Burj Khalifa.

All of this completely defies the smallest bit of common sense.

For clairty I'm in your camp and the super tall seems like a fantasy.
Just to play devil's advocate,

There was this nugget, "Matteson's plans are to start construction first on the apartment towers and Dream Hotel, and then to start construction of the Legends skyscraper once the apartment towers are 50% leased."

The capital is "committed", but probably can't be called until benchmarks like the above are hit.

[jccouger]

If he says the development is completely funded, wouldn't that be detrimental to recruiting future investors? Why would they need to invest if its already fully funded?

[jn1780]

If he says the development is completely funded, wouldn't that be detrimental to recruiting future investors? Why would they need to invest if its already fully funded?

Its the old scarcity gimmick. "Your in luck! We just had someone drop out". Its an amateur game, but there is no way in heck these towers are fully funded.

[G.Walker]

Matteson probably has LOI's from investors, but I am sure no money is being transferred until certain development benchmarks are met. But with this, its ok say the project is fully funded.

[PhiAlpha]

Huge story in the Oklahoma today giving an update on this project. Some information we already know, but also new information was provided as well. Noting the Planning Commission to hear the zoning change on April 11, with final approval by City Council on June 4. This is just more indication this is moving forward, good deal.

https://www.oklahoman.com/story/news...s/72654875007/

"If you don't think Scot Matteson can pull something like this off, then you don't know Scot Matteson."

Did I do it right? Didn't read the article but figure that's pretty close.

[Colbafone]

"If you don't think Scot Matteson can pull something like this off, then you don't know Scot Matteson."

Did I do it right? Didn't read the article but figure that's pretty close.

�� �� ��

Great, now you've made Rainey Williams mad.

[HOT ROD]

^

I believe he's playing the "fake it until you make it" game.

He's trying to at least pull off the three towers and he has to raise a ton of investor money to do that, and what typically happens (like at Sunset Amphitheater), they get a friendly architecture firm to draw up some sexy renderings with a promise to use them on the project, goes before a municipality and tries to get public subsidies, recruits a few investors and immediately spends their money on more renderings, PR, and marketing, then hope enough investment money flows in to keep things moving forward.

I was told that on a project of this magnitude, the A&E drawings alone would cost millions. And you can't file for a building permit until those are ready to go. They would have to engineer and design the entire site at the jump since there will be shared parking structures and so much crammed on a relatively small site.

At the same time, any lender is going to require that a good percentage of the investor funds are in verifiable accounts, and perhaps one building can get started but until it reaches a lease threshold, no way the rest of the loan money is provided for the next structure.

And the loans are often of the construction variety, meaning they are short term and then only when they have proper cash flow can they seek permanent financing which also pays off the construction loans.

I get all of that, but this development has been in the works for years. There was always 3 residential buildings and 1 hotel tower on top of a retail podium and parking structure. The city already approved $200M TIF refund for the project. The city also voted for two stadiums to be built in the immediate vacinity - likely helping solidify any of the investment funding you're speaking of. ..

The only thing recent on this project was the announcement of Tower 3 as a supertall. Im inclined to agree that Legends Tower as a supertall is the 'fake it till you make it' piece of this; but the other 3 towers are set up to succeed in my opinion and it doesn't hurt for him to apply to the FAA and city for a variance before starting the whole thing.

I get the scrutiny and I also get the doubt, but it does seem to line up once you step back and perhaps consider if it were a different location/city but then realize that OKC has literally NOTHING like this nor planned, ever - which being first-to-market has its own appeal.

[BoulderSooner]

The only thing recent on this project was the announcement of Tower 3 as a supertall. Im inclined to agree that Legends Tower as a supertall is the 'fake it till you make it' piece of this;

tower 4

[HOT ROD]

For clairty I'm in your camp and the super tall seems like a fantasy.
Just to play devil's advocate,

There was this nugget, "Matteson's plans are to start construction first on the apartment towers and Dream Hotel, and then to start construction of the Legends skyscraper once the apartment towers are 50% leased."

The capital is "committed", but probably can't be called until benchmarks like the above are hit.

YES - this is my thinking as well.

The project is a go for sure, it's just the supertall is the thing that's 'visionary' and as you mentioned - that investment is dependent upon 50% performance of the ~550 market rate residences in Emerald and Ruby towers (around 280 residences as a benchmark). ... which to me, seems to be set up to succeed.

[HOT ROD]

tower 4

I know what you're saying Boulder, but in the original plans Legends Tower was identified as Tower 3 likely to identify it as the third residential tower, and that tower 4 is the hotel tower. Tower 3 was always intended to be last, but I think they called it tower 3 originally on purpose and not chronologically; but yes, the 4th tower 'maybe' built.

[dankrutka]

The project is a go for sure….

I don’t understand how anyone who has followed developments on this board for years could possibly conclude this. Far less ambitious projects from far more reputable and accomplished developers have regularly failed to come to fruition. I’d still put the chances of three towers being built as minimal. It’s far more likely nothing is built at all from this project.

[G.Walker]

I disagree, there seems to be a lot of momentum for this project, as well as support from the city. Unlike the ambitious OG&E four tower proposal, this project keeps getting scaled up, not down. But even if only two 350ft towers end up coming out of all this, that is still a good result. We are coming around 3rd base on this whole thing. We will know in about 6 months if all this talk was for real, or just a ruse.

[HOT ROD]

Exactly, Im not sure what's wrong with me drankula. I mean, I keep thinking that the 3 towers appears to be a solid go yet you keep reminding me that I'm forgetting about never built OKC projects.

Yet somehow, as GWalker agrees, there's momentum with this project in that they have TIF in place, have been planning for years for the 3 towers at least, and are pursuing hard variances with the FAA and city for the 1,907 height of the supertall. Now WHY would anybody in their right mind do any of this, let alone pursue investors, if they knew about OKC's troubled past building towers. I suppose I should also temper my enthusiasm about the arena and multipurpose stadium, and Citizen must not have been quietly built.

In all seriousness, I still think this is a go. And I think Legends Tower is a go too. The bar they are setting for the 'trigger' (half of the twin towers at market rate) is quite low particularly given their rental. Yes, I'm glass half full but it all seems to line up. Just have to see if 1) the FAA approves 2) the city approves in June (why wont they?) and then 3) if site samples start taking place between now and Sept they start hard site prep ...

And even then we need to see if 1/2 of 580 market rental units can be consumed. (that's ~300 units). Am I that blind that a new market concept couldn't be consumed in OKC, particularly if I consider the growth OKC has had and even more bullish to persist? I'm certain not everyone wants (or needs) a single family home in a nice school district in OKC.

[Rover]

I get the scrutiny and I also get the doubt, but it does seem to line up once you step back and perhaps consider if it were a different location/city but then realize that OKC has literally NOTHING like this nor planned, ever - which being first-to-market has its own appeal.

Taking undue risks just to be “first to market” in unproven small markets doesn’t interest banks and astute investors being asked to front hundreds of millions of dollars. They don’t loan out of ego.

[bison34]

I hope people realize this will be done in phases. It's very important that you know that. Phase 1 (res towers and hotel) are done all over America, in cities like OKC. OKC is late to the game with residential towers.

Phase 2, which will be years away, and will likely change from 1 large supertall to a couple smaller, isn't necessary for Phase 1 to happen. I don't see why people can't realize that Phase 1 can happen without Phase 2, but not the other way around.

If demand doesn't make Phase 2 viable, they can always change it. I think Phase 1 is a damn fine project for OKC, and something we have been missing when compared to other cities.

[jn1780]

I don't know how much it costs to get FAA approval but I bet it's a small price to pay to appear credible. Especially if it's lumped into approvals needed for other towers.

[jn1780]

I hope people realize this will be done in phases. It's very important that you know that. Phase 1 (res towers and hotel) are done all over America, in cities like OKC. OKC is late to the game with residential towers.

Phase 2, which will be years away, and will likely change from 1 large supertall to a couple smaller, isn't necessary for Phase 1 to happen. I don't see why people can't realize that Phase 1 can happen without Phase 2, but not the other way around.

If demand doesn't make Phase 2 viable, they can always change it. I think Phase 1 is a damn fine project for OKC, and something we have been missing when compared to other cities.

Yes, that seems to be given. Phase 1 maybe separate phases also. I think the issue is that Phase 2 isn't being presented like its "Years away" that causes people to pause and think about the true status of phase 1.

[BoulderSooner]

I know what you're saying Boulder, but in the original plans Legends Tower was identified as Tower 3 likely to identify it as the third residential tower, and that tower 4 is the hotel tower. Tower 3 was always intended to be last, but I think they called it tower 3 originally on purpose and not chronologically; but yes, the 4th tower 'maybe' built.

i see now thanks ..

my mistake ..

[kukblue1]

Just saw this on x: Office vacancy rates are skyrocketing:

The latest data shows that the office vacancy rate in the US is about to hit 20% for the first time in history.

Even during at height of the pandemic, office vacancy rates did not break above 19%.

As a result, the price of office buildings is now down nearly 50% from its high.

Just last week, a Canadian pension fund just sold its 29% stake in this New York office building for $1.

The pension fund had already poured $71 million into the property and the building currently has a $220 million mortgage

[G.Walker]

Hence why this project will not have any office space, lol.

[UrbanistPoke]

^

I believe he's playing the "fake it until you make it" game.

He's trying to at least pull off the three towers and he has to raise a ton of investor money to do that, and what typically happens (like at Sunset Amphitheater), they get a friendly architecture firm to draw up some sexy renderings with a promise to use them on the project, goes before a municipality and tries to get public subsidies, recruits a few investors and immediately spends their money on more renderings, PR, and marketing, then hope enough investment money flows in to keep things moving forward.

I was told that on a project of this magnitude, the A&E drawings alone would cost millions. And you can't file for a building permit until those are ready to go. They would have to engineer and design the entire site at the jump since there will be shared parking structures and so much crammed on a relatively small site.

At the same time, any lender is going to require that a good percentage of the investor funds are in verifiable accounts, and perhaps one building can get started but until it reaches a lease threshold, no way the rest of the loan money is provided for the next structure.

And the loans are often of the construction variety, meaning they are short term and then only when they have proper cash flow can they seek permanent financing which also pays off the construction loans.

You're 100% right. Matteson does not have a great reputation in Orange County. Just an odd bit of info but frankly goes into some of the publicity stunts is he dated Shannon Beador from Orange County Housewives so he's not afraid of having his name in the press. Frankly some of the only projects him and others he's partnered with that had good success have been the Dream Hotels and really that was just a play to get one of the big hotel brands to acquire. There's a lot of hotel developers who are doing that because they know Hilton, Hyatt, etc. will buy up brands to limit competition so you build 1, 2, 3 projects and sell the 'brand name' and these majors don't even care if the hotels cash flow they just are aiming to eliminate competition. He's got cash from that I'm sure he needs to reinvest but not to the scale of being able to do this size of a project.

The unfortunate side is that the need for 2,000 residential units and more hotel rooms is needed. Oklahoma City is one of the fastest growing major MSA's and one of the only one's not with over supply issues nationally. Dallas, Austin, Houston, etc. for example close by are all in major rent corrections due to over supply. It's cheaper to rent in Austin currently in many areas than it is in OKC or even Tulsa. OKC is building between 1,500-2,000 multifamily units a year and could likely support additional uptick to that of at least 500 to maybe even 1,000 units more a year. So big picture the number of units proposed isn't that crazy if it were being built in more realistic phases and in realistically sized towers (more like the original 3 tower proposal). Building it all at once as he claims would be disastrous short-term to dump 2,000 or less units on the market over 12 months along with other projects in the MSA. I don't see how any debt sourcing would look at this and go yeah that's a great idea to do that. I think Oklahoma deserves big thinking and bigger projects like this, but the super tall tower just doesn't make sense and this feels scammy to me especially given his track record. The advantage of going outside a market you've tried doing projects in before and live in, is you can fake acting successful a lot easier given there's been little mouth to mouth conversations within the investment communities about past projects and encounters.

The 'fully funded' is just a bunch of press BS he's pumping out - there is no way in h**l a construction lender or any type of debt fund has a signed committed construction loan for the project when it hasn't even went past rezoning yet. No chance. That would be one of the dumbest financing decisions ever made by a financial institution and regulators would be all over that if it was the case. He's likely posturing to get the rezoning approved with no questions asked because he has 'financing secured'

[Mountaingoat]

Maybe knows a Nigerian Prince or an Indonesian billionaire?

[jn1780]

Maybe knows a Nigerian Prince or an Indonesian billionaire?

Knows some rich athletes apparently.