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March 18, 2010 |
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| November 11, 2008 |
By: Terry Sheridan |
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orus Bank, one of the most active lenders to developers during the condo construction boom, is taking title to the twin, 26-story Tao Sawgrass condominium buildings in Sunrise in lieu of foreclosure.
Although there have been no closings on the complex’s 396 units, purchase deposits are in place on about 80 percent of the project, according to John Barkidjija, a Corus senior vice president in Chicago.
The bank plans to oversee unit closings and market unsold condos once the complex is finished, Barkidjija said.
Corus, as W/K Sawgrass LLLP, expects to start closing unit sales next month. Construction trailers are still parked across from three fountains at the Tao entrance. Corus has hired Hyperion Development of Miami to complete unfinished portions of the complex. Hyperion affiliate POSH Residence Management will handle leases and broker re-sales for condo buyers.
Tao towers over Pink Flamingo Lane and Flamingo Road and the surrounding low-rise development near the Sawgrass Mall and the BankAtlantic Center.
Since buyers have not closed on any of the condos, “the project is worth less than the capital loaned on it,” said Tom Bartelmo, president and chief executive of J.I. Kislak in Miami Lakes.
Tao developers J.I. Kislak and Weitzer Communities, as Weitzer/Kislak Sawgrass LLLP, obtained a $126 million construction loan from Corus Bank and a $19.7 million mezzanine loan from Fidelity Real Estate Growth Fund II in April 2006.
Fidelity assigned its interest in the property to Corus on Oct. 7, according to county records.
Asked whether Corus was taking back the project in lieu of foreclosure, Bartelmo said that “it’s been a mutual feeling on both parts.”
Developer Harry Weitzer did not return a phone call.
Tao won attention as the first high-rise condo in western South Florida for more than just its height.
Sunrise officials began pushing for high-rise residential development in the area almost a decade ago in an effort to make the city the urban core of western Broward.
The city and developers K-Group Holdings of Miami now are preparing to launch the 92.2-acre Metropica mixed-use project along both sides of Northwest 136th Avenue from its intersection with Sunrise Boulevard north to the BankAtlantic Center on Panther Parkway.
Executives of K-Group did not return a phone call seeking comment.
In September, Broward County commissioners approved a land-use amendment to the county comprehensive plan for Metropica. The project still needs regional and state approval.
The two-phase project will include 785,000 square feet of office space, 485,000 square feet of commercial space, and about 2,800 residential units.
Sunrise officials did not return phone calls about Tao or Metropica.
Metropica and its potential to become a key activity center in western Broward County is why Corus believes the Tao units will close rather than buyers opting to cancel contracts, Barkidjija said.
Tao was Kislak’s first venture into condo development and its first to be surrendered to a lender, Bartelmo said.
Kislak converted a total of 502 apartments to condos about three years ago, at Citation Way in Coral Springs and the Colonnade in Plantation.
Kislak now is looking to buy distressed properties nationwide, Bartelmo said.
Asked what went wrong with Tao, Bartelmo said, “I could speculate, but we all got caught up in a bad market.”
Corus is among national lenders hurt the most by the decline in the real estate market. The bank loaned $5.21 billion on 103 projects nationwide, according to its third-quarter report. Florida properties make up the bulk of those loans, with 25 carrying loans totaling $1.5 billion. In South Florida, Corus loaned $1.3 billion on 16 projects.
The bank reported a net loss of $128 million for the third quarter of 2008, a dramatic reversal from net income of $35.5 million in the same period a year prior.
For the first three quarters this year, Corus posted a net loss of $139.7 million compared with net income of $104.3 million last year.
Corus originated $1.2 billion in new loans during the first half of 2008. The bank made no loans in the third quarter and doesn’t intend to make any for at least the next several quarters, the report states.
Corus Bankshares president Robert Glickman described the “current housing calamity” as worse than even the severe downturn the company had expected.
The overall credit market collapse, and Corus’ focus on condo construction loans, have led to significant increases in bad loans and operating losses, Glickman stated.
“Unfortunately, we anticipate these difficulties will persist for some time,” he said.
Terry Sheridan can be reached at (954) 468-2614.
Tao photo by Melanie Bell |
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