Corus takeover could be good for South Florida condo market

Following the failure of Chicago's Corus Bankshares and its seizure by federal regulators, speculation this week focused on the fate of the lender's $4 billion in commercial loans, a good quarter of them secured by condominium projects in South Florida.

FDIC spokeswoman LaJuan Williams-Dickerson said regulators would begin marketing the assets to potential buyers for a private placement transaction that is expected to be completed in about 30 days. She could not say whether the assets would be sold to a single buyer or in loan pools.

Corus was one of the largest condominium construction lenders in South Florida during the real estate boom, financing 34 projects in Miami-Dade, Broward and Palm Beach counties. It held more than $1 billion in South Florida loans at the time of its Friday seizure, most of which were nonperforming.

Much like a death after a long and painful illness, Corus' failure was met with a sense of closure and relief from some local real estate analysts and developers, who said now the condo market could hit the reset switch and begin moving forward.

"They made all the loans that shouldn't have been made right at the end of the cycle. They represented the largest portfolio of troubled projects, so, in that respect it's kind of like the last hurrah,'' said Jack Lowell, vice president of Coral Gables-based Flagler Real Estate Services.

Corus also controlled a large portion of the unsold condo units in the greater downtown Miami market. A new investor, who would not be fighting to minimize losses, would likely slash prices to quickly sell inventory.

"That will be good for pre-sale buyers and new buyers,'' said Inigo Ardid, vice president of Key International, which developed Ivy and Mint with Corus financing.

Several names have circulated as potential candidates for the Corus portfolio, including Miami Dolphins owner and real estate magnate Stephen Ross, who is chief executive of New York-based Related Cos. and an associate of Jorge Perez of The Related Group in Miami.

Other potential buyers include Miami-based Crescent Heights, Dallas-based investor Lone Star Funds, Colony Capital in Los Angeles, New York-based iStar Financial and Starwood Capital Group of Greenwich, Conn., according to The Wall Street Journal. MB Financial Bank assumed Corus' deposits and $3 billion in marketable securities, leaving $4 billion in mostly soured loans with the FDIC. Corus' failure will cost the federal insurance fund $1.7 billion, the FDIC said.

The size of the portfolio and the delinquent status of most of the loans could make it hard for the FDIC to place the assets, unless it offers them at a significant discount. Some analysts said it was doubtful a single enity could swallow the entire nugget, meaning a consortium of investors would likely coalesce to make an offer or the FDIC would have to sell the portfolio piecemeal.

"I'm not sure if there is any one group that has the wherewithal or expertise to take over the entire Corus portfolio,'' said Peter Zalewski, principal of Condo Vultures, a consultancy and brokerage firm specializing in distressed condo sales.

"It's going to be an extremely interesting negotiation,'' Lowell said. ``In addition to picking up assets, [investors] are going to want to have a very detailed understanding of how the resources are going to be provided to complete the projects.''

Several Corus projects sit empty, awaiting construction or closings that have been slow to materialize in the depressed market. Among them are Paramount Bay, Mint and Trump International Hotel and Tower in Fort Lauderdale.South Florida projects financed by Corus BanksharesCorus Bankshares propelled much of South Florida's vertical growth during the boom years.

Below are projects they financed in South Florida along with the original loan amounts:
Jade Ocean Condominiums, Sunny Isles, $288,115,000
Paramount Bay, Miami, $216,000,000
The Mint at Riverfront, Miami, $191,800,000
The Quantum, Miami, $145,000,000
Infinity, Miami, $140,300,000
Trump International Hotel and Tower Fort Lauderdale, $139,000,000
Continuum at South Beach Phase II, Miami Beach, $135,000,000
The Ivy at Riverfront, Miami, $130,400,000
Artech Residences at Aventura, Aventura, $130,000,000
Tao Condominiums, Sunrise, $126,250,000
The Caribbean, Miami Beach, $124,700,000
The Edge, West Palm Beach, $117,246,250
Marina Blue, Miami, $110,000,000Four Seasons Miami, $94,000,000
Blue, Miami, $90,000,000
Hamptons South, Aventura, $86,000,000
Akoya Condominiums, Miami Beach, $83,175,000
The Strand, West Palm Beach, $80,088,000
Artecity, Miami Beach, $60,300,000
Biscayne Village, Miami, $50,125,000
Valencia, South Miami, $50,000,000
Isles at Sawgrass, Sunrise, $49,500,000
Sole on the Ocean, Sunny Isles Beach, $47,272,000
Europa by the Sea, Lauderdale by the Sea, $45,650,000
Onyx, Miami, $44,100,000
Green Key, Pembroke Pines, $36,500,000
Mark at Cityplace, West Palm Beach, $32,400,000
Esplanade on the New River, Fort Lauderdale, $30,325,000
Peninsula, Aventura, $30,298,616
Clear Lake Colony Apartments, West Palm Beach, $29,870,000
Dolcevita at Singer Island, Palm Beach Shores, $28,400,000
Kensington, Royal Palm Beach, $27,350,000
Four Seasons Miami, $18,500,000

Reported by The Miami Herald, Monica Hatcher