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September 2, 2010 |
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| November 13, 2009 |
By: Eric Kalis |
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Courtney Park at 5080 Lantana Road
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srael-based investor Dizengoff-Trading Group has added to its South Florida holdings with the $6.86 million purchase of 115 condo units in Lake Worth.
Dizengoff, a real estate development and commodities firm, bought 115 units at the Condominiums at Courtney Park at 5080 Lantana Road in Lake Worth. The seller was Bank of America, which took title to the unsold units in a March foreclosure sale.
The purchase by Dizengoff closed Thursday, said attorney Daniel Kaskel, who represented Dizengoff. Kaskel chairs the real estate practice group at Sachs Sax Caplan in Boca Raton.
The deal has not yet been recorded by Palm Beach County.
Dizengoff’s purchase of the Courtney units marks the second bulk condo acquisition by the firm in the last three months. In September, Dizengoff bought 118 units at Portofino at Jensen Beach for $6.88 million. The firm also bought a retail center called the Shoppes at Monarch Lakes in Miramar for $8.29 million in July.
The Courtney units will be operated as rental apartments, said Ronen Saban, U.S. region manager at Dizengoff. The remaining 77 units were previously sold by Marcliff Courtney Development of Rockville, Md.
Altman Management of Fort Washington, Pa., will manage the Courtney rentals, Saban said.
“This property has high potential for positive cash flow,” he said. “It is a very busy location for rentals, and we know other comparable [complexes] are doing extremely well. The property was built in 2000 and is in good condition.”
Dizengoff paid cash but is seeking financing for the acquisition, Saban said.
Bank of America took over ownership to the 115 units with a minimum $100 bid at a March foreclosure auction in Palm Beach Circuit Court, according to Palm Beach County records. The bank had been awarded a $12.22 million foreclosure judgment against Marcliff.
Calls to Bank of America and Marcliff managing member Richard Kadish were not immediately returned.
Marcliff converted Courtney from a rental complex to condominium community in 2006, as the condo conversion market was on the downswing.
Selling 77 of the units after the conversion market dried up was “impressive, but then they were stuck,” Saban said.
Courtney is one of many fractured condo complexes in South Florida that have ended up in the hands of lenders, but few of the properties have been sold this year, Kaskel said.
“The problem is the financing,” he said. “You need a buyer who is willing to come to the closing table with cash. There is also more potential liability with fractured condo deals, as the buyer may be stepping into the developer’s shoes.”
A bulk condo buyer can potentially take on liabilities from the previous developer, such as legal claims regarding construction of the project and homeowner association deficiencies or bankruptcies. The bulk buyer assumes the responsibility of the construction done by others, according to state law.
“There’s always an element of risk,” Kaskel said. “You have to work around the liability issues during due diligence and make sure the delinquency rate among existing owners isn’t unmanageable.”
But fractured condo deals could dominate sale transactions in the region in 2010 and 2011, as banks reach a breaking point and are compelled to unload properties, Kaskel said.
Lenders should be more willing to finance these deals in the future as more of them close.
“The banks would rather have the asset off their books than keep them one day with hopes that the market will return,” he said. “They are not suited to be in the business of property ownership.”
Eric Kalis can be reached at (305) 347-6651.
Courtney Park photo by Melanie Bell
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