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September 9, 2010 |
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| March 25, 2010 |
By: Eric Kalis |
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aramount Bay, a Miami condo project financed by now-failed Corus Bank, is facing foreclosure over a $216 million construction loan in default.
Lender iStar Tara LLC, an affiliate of a joint venture led by Starwood Capital Group, last Friday filed a lis pendens, a notice of a pending foreclosure, against Paramount developer Royal Palm Holdings and 21 affiliates and lien holders, according to Miami-Dade Circuit Court records.
The foreclosure action targets the construction loan Corus and iStar Financial provided Royal Palm in December 2006 for the 47-story, 346-unit project at 2066 N. Bayshore Drive.
The city of Miami, which has a lien against the project, is listed as a co-defendant.
Royal Palm chief executive Daniel Kodsi said Thursday that he is aware of the foreclosure action and hopes to work out a deal with iStar Tara/Starwood outside of court.
“We are working in conjunction with Starwood,” Kodsi said. “This is not a distressed situation. Our goal is to protect the integrity of the project and work with, not fight with, our lenders. We don’t want it to become a foreclosure fire sale.”
The project is complete but still needs a temporary certificate of occupancy from the city of Miami, Kodsi said. Kodsi said “a couple of minor items need to be finalized before seeking” the certificate.
He did not elaborate on the minor items.
No Paramount unit sales have closed, according to Miami-Dade property records.
More than 200 units are under contract, Kodsi said.
It remains to be seen how many of those buyers will go to the closing table. As prices have plunged, buyers have walked away from contracts to buy condo units and many are fighting with developers for deposit refunds.
“We need to go through this process to help [the lenders] finish the building and [complete] closings and sales,” he said. “We are in the midst of a resolution as we speak.”
The 1.83-acre project site was most recently appraised at $12.2 million by Miami-Dade County.
Holland & Knight attorney Jose Casal, who is representing the lender in the foreclosure action, declined comment.
Paramount is in the Biscayne Corridor north of Miami’s downtown. Condo projects in the area are contending with a glut of units and prospective buyers who are having trouble getting financing.
Investors are buying condo units in bulk but are more interest in buildings in downtown and the Brickell Avenue financial district.
Recent bulk sales include Venezuelan company H.Q. Investors’s $6.8 million purchase of 37 units at the Wind by Neo project and Jamaican real estate investment trust Kingston Properties’ acquisition of 19 units at the Loft II for $2.8 million, according to Miami-Dade records.
Some Biscayne corridor projects that sold condos are having problems. On Feb. 18, unit owners at Ten Museum Park at 1040 Biscayne Blvd. sued developer Gregg Covin, architect Chad Oppenheim and Switzerland-based Clinique La Prairie founder Armin Mattli to force them bring the 50-story building up to the standard touted in the glossy marketing campaign in 2005. Ten Museum’s closings began in 2007; 95 percent of the units have been sold. The lawsuit is pending.
Paramount was one of many projects financed by Corus during Miami’s condo boom between 2004 and 2006. Other Corus-funded projects include Ivy and Jade Ocean in Miami-Dade County and Trump International Hotel and Tower in Broward County.
Corus Construction Venture, also an affiliate of Starwood, filed a foreclosure action against Trump International developer SB Hotel Associates on March 11 over a $139 million loan Corus granted SB Hotel in 2006.
Starwood paid about $554.4 million in October 2009 for a 40 percent stake in the Corus portfolio. The Federal Deposit Insurance Corp. controls the remaining 60 percent. As part of the deal, Starwood received access to a $1 billion credit line to finish construction of incomplete projects.
Starwood is a Greenwich, Conn.-based investment company. Through affiliate Starwood Land Ventures, the company recently closed on the $81 million purchase of all the Florida assets of bankrupt home-builder Tousa. Starwood has begun selling some of the assets to other builders, including Miami-based Lennar.
Starwood formed two private investment funds, including one with $1.5 billion to invest in undervalued hotels, office buildings and other real estate-related assets. Starwood Capital also controls Starwood Property Trust, which the company took public in August, raising $921 million for investments.
The Paramount property was previously the site of a building that was severely damaged in a March 2008 construction crane accident. Two project workers died in the accident.
The same building was featured in a scene in the 1998 movie “There’s Something About Mary,” starring Cameron Diaz and Ben Stiller.
Eric Kalis can be reached at (305) 347-6651.
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