Josephine PampanasBlog

(South Florida Business Journal, May 14, 2010)

One of the most-watched bankruptcies in South Florida – that of the Everglades on the Bay condominium – is close to being resolved, attorneys on Friday told the judge handling the case.

“We are very close to having terms that we can recommend to the bank group,” Ana Alfonso, attorney for Bank of America, for the lending group on the $300 million project, told U.S. Bankruptcy Judge Laurel Isicoff.

The 49-story, twin-tower condo is one of the biggest real estate bankruptcies in Miami. It was filed against developer Cabi Downtown in August after BofA refused to allow write-downs of sales prices. The same day, the bank filed a foreclosure action on a construction loan of $209 million – one of the first hostile foreclosure actions on a condo tower in Miami in recent history.

Since then, BofA has attempted to dismiss the bankruptcy.

But Cabi attorney Mindy Mora echoed Alfonso’s optimism about an agreement.

“We’re requesting the hearing be continued because we believe we are on the verge of finalizing our disclosure statement with BofA, and the [creditors]) committee, as well,” said Mora, of Bilzin Sumberg Baena Price & Axelrod in Miami.

Another hearing is set for May 28 on the disclosure statement, which lays out a plan for Cabi to continue running the building, selling and leasing units, and paying off the loan.

The only objection came from Gary Blum, an attorney for W.G. Yates & Sons Construction Co., one of the larger unsecured creditors. He asked unsuccessfully for the judge to allow other parties to bid on taking over the project.

Blum said allowing Cabi to run the project longer, without a final agreement from the lenders, only puts Cabi deeper in the hole financially, which could potentially minimize Yates’ eventual recovery.

But Isicoff said she wouldn’t allow the bankruptcy to continue much longer.

“I’m am not inclined to go further,” the judge warned …. “Either you lock yourselves in a room and chew on each other until there’s a deal, or we pull the trigger.”

The judge made it clear she was still willing to consider motions to concert the project to a liquidation or dismissal, “in which case there will be only one winner.”

“That would be the banks,” Mora replied. “Although they may not like what they win.”

“Yes, be careful what you wish for, Ms. Alfonso,” the judge warned.

Robert Cooper, an Aventura-based attorney for buyers who are trying to recover deposit money on the project, said he and the developer were nearing an agreement to refund any deposit money over 15 percent of the original unit purchase price.

Cooper told the judge that about half of his clients are of Haitian descent and need the money partly because of the recent earthquake in Port-au-Prince and the effect it has had on their families, among other financial reasons.

SOUTH FLORIDA BUSINESS JOURNAL (May 13, 2010)

The Related Group has given back to its lenders about half of the condos in the 1,800-unit Icon Brickell in downtown Miami.

The units, spanning two of Icon’s three towers, were deeded back to an HSBC-led group of lenders, according to a company statement, released Tuesday through Zakarin Public Relations in Miami.

Related called the move a “friendly settlement” reached May 11. As part of the deal, Miami-based Related Group has become co- manager of the project’s sales and marketing efforts on Tower 1 and 2, which contain 1,276 units, with residential brokerage Fortune International, the statement said.

Jack McCabe, of Deerfield Beach-based McCabe Research & Consulting, said that often times a lender will require a defaulting developer to put its own money into a settlement to retain control of sales.

McCabe said despite the shift in control of Related’s signature project, Icon helped Related CEO Jorge Perez solidify his position as the region’s dominant developer.

Related Cervera Realty Services, Icon Brickell’s original sales broker, will continue to oversee sales in Tower 3, which is not being given back to the lender. The tower is financed through a Bank of America-led consortium. Bank of America had no comment about the lending situation at the other towers.

Tower 3 is where the Viceroy condo-hotel is located.

The sales strategy in the Viceroy tower, which has 372 condo-hotel units and 148 hotel rooms, has involved lowering maintenance fees and discounting square footage prices by about half their original $700 a foot average. So far, about 125 of the units have been sold, said Related Cervera CEO Alicia Cervera Lamadrid. The Related Group is a partial owner of that brokerage.

Along with help from designer Philippe Starck, Arquitectonica designed the massive three-tower Icon project, which includes a spa, restaurants and several pools. The project entrance features giant sculpted heads that serve as columns for the massive towers.

Cervera Lamadrid said she is pleased with her company’s sales performance considering all the challenges the residential market has endured including a lack of financing.

She said she could not explain why her company had been taken off sales at the 715-unit Tower 1 and 561-unit Tower 2, referring questions to the Related Group and the lender.

About 400 units have been sold between the two towers. The sales strategy in both has been to discount units and provide construction lender financing.

WASHINGTON – May 13, 2010 – Millions of Americans are still likely to lose their homes in the coming years, but the foreclosure crisis is finally showing signs of subsiding.

But the data aren’t all sunny. While the number of new delinquencies is dropping, the number of borrowers losing their homes is still rising. Banks seized a record 92,000 homes last month.

And there are millions more potential foreclosures ahead. Nearly 7.4 million borrowers, or 12 percent of all households with a mortgage, had missed at least one month of payments or were in foreclosure as of March, according to Lender Processing Services Inc., a mortgage data research firm.

RealtyTrac, a foreclosure-listing firm in Irvine, Calif., reported that nearly 334,000 households, or one in every 387 homes, received a foreclosure-related notice in April. That was down more than 9 percent from March.

Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.

As the economy turns around, “you will see an improvement in housing markets and in foreclosure activity,” said Rick Sharga, a RealtyTrac senior vice president. “The problem is that there’s such a backlog right now.”

Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can’t qualify or fall back into default.

The Obama administration is managing a $75 billion program that so far has helped about 231,000 homeowners with permanent reductions to their monthly mortgage bills. That’s about 20 percent of the 1.2 million borrowers who started the program over the past year.

Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. Cities lose property tax dollars from homes that sit empty and lower property values.

Among states, Nevada posted the highest foreclosure rate in April, with one in every 69 households receiving a foreclosure notice. Foreclosures there were up 10 percent from March, but unchanged from a year earlier. Next on the list were Arizona, Florida, California and Michigan.

Las Vegas continued to be the city with the nation’s highest foreclosure rate, but activity there was down 3 percent from a year earlier.

And in another sign the problem is receding, nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was Reno, Nev., where foreclosures were up 16 percent from a year ago.

View from both bedrooms

5775 Collins Ave. Apt # 905 …..On prestigious Millionaires Row

This renovated 2 bedrooms, 2 bathrooms apartment lies on the Southwest corner of the Marlborough House Condo. The building sits right on the Beach with direct Ocean Access. The condo has been totally renovated and already passed its 40 year inspection.

Charming and very private.

The apartment has great Ocean Views from both bedrooms which face Southeast as well bay views from the living. Bathrooms, kitchens and floors have been renovated.

• $369,000

• 1296 Sq. Ft.

• Year Built: 1963

• 2009 Taxes: $6709

• Monthly Maintenance: 658

• Assigned parking space: 1

• Floor: tile

• Direct ocean access

• Renovated kitchen and bathrooms

• Large walk-in closet in master bedroom

• Full amenities

• 24 hrs security

Finding a condo or townhouse to purchase in South Florida is getting a bit tougher.

The number of existing condos and townhomes on the market this month has fallen by 23 percent, year-over-year, according to a new report from Condo Vultures LLC, a Bal Harbour-based real estate consultancy.

There are now less than 40,000 available, down from 52,000 in May 2009.

However, that does not include new units that developers are marketing.

“The inventory is depleting for a variety of reasons, ranging from more investors and second-home buyers purchasing units at prices they think are deeply discounted, to primary users taking advantage of the government incentives related to real estate,” said Peter Zalewski, a Condo Vultures principal, in a news release. “There also have been some sellers who have decided to take their condos off the market as a result of obtaining mortgage modifications.

Miami-Dade County has the most condos and townhouses for resale in South Florida, with 41 percent, or 16,200 units, of the overall available inventory. That’s down 21 percent from nearly 20,600 condos and townhouses for resale in Miami-Dade in May 2009, according to the report.

Broward County has 30 percent, or 12,100, of the condo and townhouse inventory available resale. That’s down from 17,200 units a year ago.

In Palm Beach County, there are about 11,300 condos and townhouses for resale, representing about 29 percent of the region’s available resale inventory. In May 2009, there were 13,900 condos and townhouses for resale in Palm Beach County.

In the meantime, total pending sales are up, with more than 12,200 condos and townhomes under contract in South Florida. That’s up 77 percent from the same time last year, when there were 6,900 contracts.

South Florida Business Journal, 5/11/2010

There’s a tiny glimmer of light in what otherwise has been a very dark time for South Florida’s real estate market.

A new report from Florida Realtors finds that the median price of an existing single-family home in West Palm Beach rose 3 percent in the first quarter, to $236,100 from $229,200 in the year-ago period.

Four other markets also saw prices inch up. However, statewide prices remained down, with the median price falling 5 percent, to $133,800 from $140,900 a year earlier.

“Median prices in most areas of the state continue to fall,” said Sean Snaith, director for the University of Central Florida’s Institute for Economic Competitiveness, in a news release. “However, the rate at which they are falling has diminished significantly, and this is indicative of a bottom approaching.” The number of homes and condos that sold in the first quarter rose in all three counties and statewide, according to Florida Realtors.

West Palm Beach saw the biggest jump in single-family home sales, up 20 percent to 1,949 from 1,625. Condo sales there rose 47 percent, to 2,282 from 1,549 a year earlier. However, unlike single-family home prices, condo prices slid 9 percent in West Palm Beach, to $93,500 from $102,900.

Single-family home sales in Fort Lauderdale were up 7 percent, to 1,756 from 1,647. However, the median price fell 6 percent, to $196,700 from $210,200. Condo sales there rose 45 percent, to 2,739 from 1,893, but prices slid 15 percent, to $71,900 from $84,100.

Miami single-family home sales were up 12 percent, to 1,530 from 1,372. The median sales price, however, fell 6 percent, to $191,200 from

$203,700. Condo sales in Miami were up 46 percent, to 1,920 from 1,311. The median price slid 9 percent, to $136,100 from $149,000.

Statewide, sales of existing single-family homes rose 24 percent, to 38,846 in the first quarter from 31,410 a year earlier.

Statewide, sales of existing condominiums in the first quarter rose 67 percent, to 16,897 from 10,131 from the same period the previous year.

“Results indicate that the real estate market in Florida has hit bottom and is in the process of stabilizing across most property types,” said Timothy Becker, director of the University of Florida’s Bergstrom Center for Real Estate Studies, in a news release “Private capital – both foreign and domestic – continues to enter the state in search of quality investment deals.”

South Florida Business Journal

The mortgage on the Mondrian South Beach condo hotel was extended until April 2017, Morgans Hotel Group Co. said.

The New York-based company (NASDAQ: MHGC) is a joint venture partner in the Mondrian, which open in December 2008, and manages the property.

It originally obtained a $124 million mortgage from Eurohypo, as an administrative agent for a group of lenders. The joint venture still owns 243 of the 461 units at the hotel, at 1000 West Ave.

Morgan Hotel Group said $70 million is outstanding under the first mortgage. In the modified mortgage, the joint venture partners can accrue all interest for two years. The owners can also fund up to 80 percent of the purchase price for condo-hotel unit buyers.

Under the agreement, the $28 million the joint venture partners invested in the property was elevated in capital structure to take the same priority as the mezzanine debt. As a result, the partners and the mezzanine creditors will split the proceeds from the unit sales after the first mortgage is repaid.

“These amendments and the extension highlight the confidence the lender has in this property and its long term business prospects,” Morgans Hotel Group President Marc Gordon said in a news release. “The lender also recognizes the critical nature of Morgans’ involvement to the success of Mondrian and granted us the right to extend for a long term while accruing interest, if necessary, and, at the same time, allowed us to advance a portion of our investment in the capital structure so that we can earn a return sooner.”

Miami Beach attorney David Philips, who represents people trying get out of purchase contracts at the Mondrian, said several of his clients recently received e-mails from the Mondrian, saying it would slash unit prices. Most of the potential buyers looked at the condo-hotel units as investments, but high prices have made closing the deals unattractive, Philips said.

Among its other properties, Morgans Hotel Group owns the Delano in South Beach and has a minority stake in the Shore Club, a South Beach hotel facing a $126 million foreclosure lawsuit.

The stimulus has gone from slowing declines in construction spending to increasing such spending, according to figures from the Associated General Contractors of America.

Total construction spending between February and March rose by almost $2 billion, according to the AGCA’s analysis of federal spending figures.

“If it weren’t for public investments in infrastructure and construction, this industry would be in free fall,” said Ken Simonson, the association’s chief economist, in a news release. “Fortunately, the stimulus is now helping rebuild a construction industry devastated by relentless declines in private-sector activity.”

Last moth, theAGCA reportedthat Florida had lost 70,800 construction jobs in February from a year earlier. However, the state added 1,000 construction jobs between January and February.

Private-sector construction, which dominates the market, slid by 0.9 percent, to $550.8 billion from $555.7 between February and March. But, public-sector spending rose 2.3 percent, to $296.5 billion from $289.9 billion in the same three-month period.

Association officials noted that high office and retail vacancy rates, along with underutilized manufacturing capacity, indicate private-sector construction will continue to decline through at least the end of the year.

“With no transportation bill, no aviation legislation and no water trust fund, the only thing waiting for this industry after the stimulus is a funding cliff,” AGCA President Stephen Sandherr said in a news release. “If things don’t change soon, all the stimulus will have been was a really expensive way to delay hardships and layoffs for thousands of construction workers.”

South Florida Business Journal

4/29/2010

Florida’s high-technology industry added 1,100 net jobs in 2008, according to the 13th annual Cyberstates report, published Wednesday.

The modest 0.4 percent gain – to 292,300 high-tech jobs – during a recession compared with an overall 4.1 percent loss in the state’s private workforce in 2008.

Other findings from the study include:

• Florida high-tech firms employed 44 out of every 1,000 private-sector workers in 2008, ranking 26th nationwide.
• The state’s high-tech workers earned an average wage of $68,200, or 72 percent more than Florida’s average private-sector wage, ranking 33rd nationwide.
• The state’s high-tech payroll totaled $19.9 billion in 2008, ranking it seventh nationwide.
• Florida had 24,500 high-tech businesses in 2008, ranking it third nationwide.

Nationwide, the high-tech industry lost 245,600 jobs in 2009, for a total of 5.9 million workers. The recession–induced 4 percent drop is slightly lower than the 5 percent decline in the private sector as a whole and followed four years of steady growth in tech industry employment.

The study is put together every year by the TechAmerica Foundation.