Everglades on the Bay bankruptcy nears resolution

By josephine on May. 14, 2010.

(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.

Icon units go back to lender

By josephine on May. 13, 2010.

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.

Foreclosures Down 2% from Last Year

By josephine on May. 13, 2010.

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.

South Florida home, condo sales rise

By josephine on May. 11, 2010.

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.”

Stimulus boosts construction spending

By josephine on May. 6, 2010.

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.”

Commercial real estate perks up!!! Good News!

By josephine on Apr. 23, 2010.

NEW YORK – April 20, 2010 – The darkest cloud over the economic recovery – the troubled commercial real estate market – may be clearing a bit.

Prices of commercial property are up slightly compared with last fall. Loan modifications have risen sharply the past six months. Commercial mortgage-backed securities (CMBS), a big funding source that was comatose for two years, has come to life recently.

The developments won’t alleviate the sector’s biggest problem: the rising pace of defaults. But they should contain the damage and provide a lifeline to better-performing properties, analysts say.

Developers put up too many commercial buildings earlier this decade and paid the price when the economy wilted as vacancies rose and rents fell. Default rates jumped to 3.8 percent from 1.6 percent in 2009 and will hit 5.1 percent this year, Real Capital Analytics says.

Many larger deals were financed by CMBS. Investment banks bundled loans for several projects into securities they sold to investors. A record $230 billion in securities were issued in 2007 vs. $3 billion last year, Commercial Mortgage Alert says. Already this year, $4 billion in deals have been done. Tom Fink of research firm Trepp predicts about $25 billion in CMBS will be issued in 2010.

Investors and banks have waded back into the market because property values have bottomed and lending standards have toughened, says David Nackoul of mortgage broker Holliday Fenoglio Fowler. And with bond interest rates at low levels, investors are seeking higher yields.

The money isn’t rescuing distressed properties. It’s refinancing high-quality loans as they mature. Even borrowers who bought projects before the real estate bubble have had a hard time refinancing because of scarce funding and lenders demanding higher downpayments.

Michael Glimcher, CEO of Glimcher Realty Trust, recently snared $100 million in loans that will be sold into the CMBS market. He’ll use the money to refinance loans for shopping centers in Tennessee and Ohio after struggling to refinance malls last year.

“The pipeline has opened back up,” he says.

The funds’ availability also could help some borrowers whose properties have fallen in value since they bought them but who are still making payments, Fink says. Deutsche Bank analyst Richard Parkus says most of the $1.4 trillion in mortgages maturing by 2013 won’t qualify for refinancing unless borrowers put up more cash.

That could lead to foreclosures, further depressing prices, though many lenders have extended loans on the hope prices will rebound. The new capital “will moderate (the slump),” Fink says.

Other good signs:

• Commercial real estate values have edged up 6 percent in recent months, Real Capital Analytics says. They fell 45 percent from 2007 to 2009.

• About $13.7 billion in loans were modified the past six months, Parkus says.

Top 5 Most Troubled Real Estate Markets

By josephine on Mar. 16, 2010.

An article from Forbes.com posted on March 1st, 2010

Top 5 Most Troubled Real Estate Markets

1. Miami, Fla.
Delinquency rate: 28.8%
Comment: In greater Miami, including Fort Lauderdale and West Palm Beach, one-quarter of mortgages are 90 days past due or worse. In Miami proper, one-fifth of mortgages are in foreclosure or converted to REO. Worst in the country by far.

2. The Rest of Florida
Delinquency rate: 16%
Comment: The only significant metro area in Florida with a delinquency rate below 10% is Pensacola, where 9% of mortgages are 90 days or more past due.

3. Las Vegas, Nev.
Delinquency rate: 21.7%
Comment: Maybe building all those high-rise condo buildings off the strip wasn’t such a great bet after all. Mortgages in foreclosure or converted to REO here are 10.2% of the total.

4. Riverside, Calif.
Delinquency rate: 19.1% Comment: Riverside’s boom is a fading memory; 7.7% of the mortgages in this metro area are either in foreclosure or converted to REO. That’s twice the 3% national average.

5. Bakersfield, Calif.
Delinquency rate: 16.4%
Comment: In this quiet area north of Los Angeles values are way down and 6.4% of mortgages are in foreclosure or converted to REO.

Going Green Creates Savings for the Commercial Sector

By josephine on Oct. 15, 2008.

According to TIME magazine, “Heating, cooling and powering office space are responsible for almost 40% of carbon dioxide emissions in the U.S. and gobble more than 70% of total electricity usage.”

START NOW
If that’s not reason enough to consider going green, consider this:  There are ways to improve your business’ green factor that can save you money as well.  You may have already heard all about these, but the time to implement them is now!

‘IDLE’ TIME
One huge factor is computers.  You can set yours to power down after 15 minutes of idle use.  According to TIME, this will cut the energy usage by 70%.

DOWN THE DRAIN
Another huge factor: water waste with flushing toilets. Newer toilets use half the water.  An easy fix:  You can use less water by putting a brick (or two, or anything that will take up space but not dissolve or rust) in your tank (at home too).

PLUG UP THE HOLES
Seal all gaps around doors and windows. Add a storm door or self-closing mechanism to reduce the loss of cold air. And, take a hard look at your insulation. Consider adding additional cellulose insulation to your existing installation to decrease your cooling bills.

XERISCAPE
We already know about water shortages here in South Florida, but if you have landscaping that needs regular mowing and maintenance, consider saving the cost of mowing and watering with plants that don’t require so much maintenance (but still look good in the process).  If you cannot change your landscaping, be careful with watering and waste. Invest in a timer for your sprinklers and keep watering to a minimum.  Make sure the sprinklers aren’t watering the sidewalk.

SEEING THE LIGHT
As your old incadescent lightbulbs burn out, replace them with CFLs (compact florescent lights, you’ve seen them: the spiral ones). While CFLs cost more, they last ten times as long for savings of about $50 comparatively over the life of the bulb (according to ABC News).

GETTING SERIOUS
Start at the top!  The U.S. Green Building Council (USGBC) is a non profit organization that certifies sustainable businesses, homes, hospitals, schools, and neighborhoods through its LEED® (Leadership in Energy and Environmental Design) Green Building Rating System™—a way of giving credits (points) in 4 levels:  Certified, Gold, Silver, and Platinum.  If you are considering new construction, check out the advantages of going green. Commonfire.org is a great, easy-to-read site offering all the answers.