|
Bulk condo
sales in Miami have been
become more common for
 developers as investors take on the task of
operating the units as low return rentals and waiting for the
sales market to provide even larger returns. Many of these bulk
condo buyers are not only American
investors but also many foreign investors are joining to buy these
condos at a discounted price.
These sales have become more visible as developers, banks that
took over ownership and successor lenders and
bulk purchasers have made them available to investors.
While the banks found
they might sell a unit or two from time to time, they are realizing
they would have to manage them for a number of years. There is also
pressure from Federal regulators to get rid of assets. Some builders
are turning to “bulk condo sales”—a new strategy to solve the real
estate marketing problem of how to move product in a sluggish
market. In bulk condo buying,
sellers (i.e. developers) and their lenders sit down and determine a
well below market prices they’d be willing to accept on the
condition that those prices will move a lot of condo inventory
quickly. Then the developer and its sales team list the condos all
at once with hopes that the heavily discounted prices will move
investors to make offers and sell off their remaining inventory. Like an auction, the
deep discounts—about 35-50% off are designed to motivate buying. But
unlike some forms of auction, “bulk” condo sales are first-come,
first-served—meaning that any buyer who qualifies can buy a condo at
its advertised price, rather than participate in a bidding war where
the advertised price is just an opening ask. In a typical auction,
units are offered at up to 60% off their original listing prices,
but are usually bid up to around 30 percent below listing price. Lender acquires 56 units
in Marina Blue
South Florida Business Journal - by Brian Bandell
A company that
gave a second
 mortgage
to the developer of Marina Blue acquired 56 units in the
downtown Miami condominium in a transaction valued at $15.7
million and declared that its mortgage was satisfied. This is
the second bulk deal at the 516-unit Marina Blue this year, and
it closes out nearly all of its units. Singer Island-based
Welcome Bay bought 60 units in Marina Blue in December for $13
million. However, it is unclear from court documents whether the
latest bulk deal was a simple sale or a deal in which the lender
released the developer from the mortgage. An official at
Miami-based Hyperion Development declined to comment. West Palm
Beach attorney Cynthia Spall, who handled the paperwork, did not
return a call seeking comment. Miami-Dade County court records
show that, on March 19, Lendco Florida, a corporation registered
in Las Vegas with an address in Menlo Park, Calif., acquired the
56 units in Marina Blue for an average of $281,118 a unit. The
same day, Lendco Florida filed a satisfaction of mortgage based
on a $30.5 million second mortgage it made the developer in
February 2008. Chicago-based Corus Bank issued a satisfaction of
mortgage notice on its first mortgage to the developer of Marina
Blue. Miami Beach resident Thomas Jermoluk, who was listed as a
manager of Lendco in mortgage documents, also gave the developer
a $5 million personal mortgage. Jermoluk and his wife acquired a
unit in Marina Blue for $200,000 on March 20.
Buying in Bulk
As prices fall and sales rise, Miami real estate brokers,
lawyers and developers say the overbuilt market has entered a
new phase
By Terry Pristin
The New York Times Despite a vast oversupply of new condos in
downtown Miami, sales have been brisk lately at 1060 Brickell
Avenue, a development with 570 units in the heart of the upscale
Brickell neighborhood. The reason? Prices have been cut in half,
to about $200 a square foot. Prices have been cut in half, to
about $200 a square foot at the 1060 Brickell Avenue condo
building in Miami. NEW YORK TIMES / MAGGIE STEBER "We reset the
prices at a sharp discount, and the units are flying off the
shelves," said Gary Barnett, the president of the Extell
Development Co., developer of 1060 Brickell. More than 200 units
have closed since April. Barnett, who has developed several new
condo projects in Manhattan, acknowledged that he and his
backers lost their entire investment. But because more than 40
percent of the units sold at full price, Barnett was able to
repay his $153 million first mortgage from TD Bank and iStar, a
troubled finance company that bet heavily on the South Florida
market. Since 2003, nearly 23,000 new condo units have been
added to the skyline, far more than this city of 400,000 could
absorb. About 9,400 remained unsold, says Peter Zalewski, the
owner of Condo Vultures Realty. But Miami real estate brokers,
lawyers and developers say the overbuilt market has entered a
new phase. "Things are starting to move through the system,"
said Adam Cappel, the president of CondoReports.com. Until
recently, many real estate professionals expected investment
funds seeking opportunities in distressed real estate to swoop
down and buy units by the hundreds and then rent them out. A few
bulk condo purchases have oc curred -- in the dozens rather than the
hundreds -- but most buyers have paid market price, not
wholesale. An investor from Colombia bought 31 units at 1060 Brickell for an average of $203 per square foot. Recently, a
private equity group paid only $63 per square foot for 51
oceanfront condo-hotel units at the Regent Hotel in Miami Beach.
Previous units there had sold for $1,100. For the most part,
bulk sales have yet to catch on. With the steep decline in
values, developers of newer buildings are no longer in control
of their projects and must defer to their lenders. "The lenders
did not want to take the hit that the bulk purchasers were
offering," said Martin A. Schwartz, a partner at Miami law firm
Bilzin Sumberg. Another obstacle is that under Florida law,
anyone who buys seven condos in a building with 70 or more units
may be assuming all the liabilities of a developer, Schwartz
said.
Robert Kaplan, a principal of
Olympian Capital Group, a Miami mortgage brokerage, said the
focus had shifted away from bulk sales to retail sales because
lenders were not willing to take $100 to $125 per square foot
when they could get $175 or more. "Every condo lender is
considering market-rate sales. They have no choice," he said.
Bargains are being offered for under $200 per square foot at
Brickell on the River South, near Southeast Fifth Street. At 500
Brickell, developed by the Related Group of Florida, prices for
one-bedroom apartments have dropped to $180,000, from $260,000.
If demand does not keep up, prices will have to adjust, Kaplan
said. "But we're not seeing that yet," he said. According to
Ronald A. Shuffield, president of brokerage Esslinger-Wooten-Maxwell,
condo sales in new buildings increased to 82 per month from 50
since April. In newer buildings, developers are negotiating
uncontested, or "friendly," foreclosures with lenders, avoiding
a protracted battle. Last month, the Related Group surrendered
its 420-unit CityPlace South in West Palm Beach, where only 39
sales had been completed, to a group of lenders led by Bank of
Nova Scotia. Thomas R. Lehman, a Miami lawyer negotiating
several friendly foreclosures, said many developers already had
quietly turned over the keys. "The wave has started. Public
records are catching up to what's already been negotiated.
Lenders are realizing that no one is going to buy their loans
and they might as well get their projects back and put them on
the market." What has been a catastrophe for developers has been
a bonanza for renters. The Miami Downtown Development Authority
says 62 percent of the already completed new downtown condo
units are occupied, split evenly between renters and owners.
Rents have declined 15-20 percent. The Related Group instituted
an unusual rent-to-own program, in which no price is set in
advance and all of the payments count toward a down payment, if
the unit is purchased within a year. Joe Higgins, the owner of
Grove Town Properties, a local brokerage, said one-quarter of
his clients were University of Miami law students doubling up
with roommates, but the rest were professionals. With so many
new buildings on the market, tenants have become choosy, Higgins
said. "Renters don't want the older buildings. They want the
granite; they want the stainless steel."
Bulk condo sales transactions recorded since the end of October 2009, according
to Condo Vultures:
• October 30 -- An
entity based in the Cayman Islands paid an undisclosed amount
for the remaining balance of a $261 million construction loan
for 244 units at the luxury 900 Biscayne Bay condo.
• November 6 --
Italian investor Ciro Campagnoli paid $5.3 million for 32 units
in 401 Blu on Miami Beach, a condo conversion project, for about
$154 per square foot.
• November 8 --
Investors from Ocala, Rudy Gram, Anthony Gram, and Beth Fisher
with Sharon Hummerhielm, paid $15.4 million for 34 units in the
luxury 3030 Aventura condo, at 3030 NE 188th St., for $223 per
square foot, a 44 percent discount.
• November 9 --
Canadian apartment operators and developers, Southwest
Properties and Armco Capital, paid $17.9 million for the
remaining 158 residential units at Downtown Dadeland, a
seven-building mixed-use condominium community in Kendall for
about $109 per square foot, a 57 percent discount.
• November 12 --
Aventura-based investors David Garfinkle and Adam Pollock paid
$4 million for 50 units in the Edgewater Lofts, a new condo
tower at 2200 NE Fourth Ave., for $99 per square foot.
PHILIPPE DIENER LLC
Top Producer
Brown Harris Stevens
2665 South Bayshore Drive, Suite 100, Miami Florida 33133
Mobile: 786.554.3085 • Fax: 305.808.3493 • E-mail: philippediener@dienerproperties.com
Send mail to:
webmaster with questions or comments about this web site.
ADA Compliance: In concurrence with
the National Association of Realtors guidelines,
www.dienerproperties.com is committed to providing an accessible
website. If you have difficulty accessing content, have difficulty
viewing a file on the website, or notice any accessibility problems,
please contact us at 786-554-3085 to specify the nature of the
accessibility issue and any assistive technology you use. We strive to
provide the content you need in the format you require.
Accessibility Statement
Copyright © 2005 - Real Estate Website - By Philippe Diener
 |
