Florida Condo preconstruction deposit recovery
New condo projects and multi-family community sales have slowed to a trickle as developers and investors decide whether to hold 'em or fold 'em.
In the fold 'em camp is D.R. Horton (NYSE: DHI), which recently walked away from a 15-acre purchase in Boynton Beach and left a $1 million forfeited deposit on the table, according to two sources.Tampa-based Carlyle Investments, owner of the property, confirmed a report that Horton forfeited a deposit.
The land, north of Gulfstream Boulevard between Old Dixie Highway and Federal Highway, was under contract for $36.96 million, or $120,000 for each of the 308 units allowed by zoning. Horton, which bills itself as the nation's largest home builder, planned to call the condominium community Las Fontanas.
Horton's second quarter SEC filing said it would renegotiate or cancel some options for land to adjust to market conditions. It's not the only builder doing so.
In the quarter that ended in August, Miami-based Lennar (NYSE: LEN) said it wrote off $15.8 million in option deposits and pre-acquisition costs, more than five times the $2.9 million in the previous year's quarter.
Florida Condo preconstruction deposit recovery
William Friedman, chairman and chief executive of New York-based Tarragon Corp. (NASDAQ: TARR) said his company, which is active in South Florida, has also walked away from a number of Florida deals, primarily on the west coast.
"We have adhered to our strict underwriting criteria and have, in some cases, renegotiated terms and, in others, walked away from contracts and written off pursuit costs," Friedman said in August.
"We know that deal walk-aways are happening around the state from anecdotal stories we are hearing," said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. "Combined with conversion reversions, it's hard, at this point, to judge the depth of the trend or what the long-range impact will be."
It is not just new condo deals that are feeling the effects of a market slide.
Some condo conversion buyers who bought at the very top of the market are now faced with a dilemma, according to Robert Given of CB Richard Ellis.
"They can sell now to another converter or investor for a $10 million loss, convert the project now for a $2 million loss or renegotiate a term loan and hold as a rental community until the market changes," he said.
McCabe sees a market slowdown as an invitation for traditional investors and bargain hunters to move back into the multi-housing market.
As cap rates have climbed higher than 5 percent throughout Florida, traditional rental community operators can now buy based on the rent rolls.
Atherton-Newport LLC, an Irvine, Calif.-based real estate and investment firm recently paid $16.5 million, or just under $86,000 a unit, for the 192-unit Country Lake Apartments rental community, on 24 acres in West Palm Beach.
Nicholas Lizotte, acquisitions director for Atherton-Newport, said his company plans to update and reposition the 21-year-old rental property with $1.8 million in improvements and reopen units damaged by Hurrican Wilma.
"We are running at 99 percent occupancy on the occupied portion already," Lizotte said. It's Atherton-Newport's third buy in South Florida, and a fourth should be closed shortly, according to Lizotte.
Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Florida 33335
954-527-1512(South Florida Area)
1-877-527-1512 (Toll Free outside South Florida)
info@go2closing.com
http://www.go2closing.com
In the fold 'em camp is D.R. Horton (NYSE: DHI), which recently walked away from a 15-acre purchase in Boynton Beach and left a $1 million forfeited deposit on the table, according to two sources.Tampa-based Carlyle Investments, owner of the property, confirmed a report that Horton forfeited a deposit.
The land, north of Gulfstream Boulevard between Old Dixie Highway and Federal Highway, was under contract for $36.96 million, or $120,000 for each of the 308 units allowed by zoning. Horton, which bills itself as the nation's largest home builder, planned to call the condominium community Las Fontanas.
Horton's second quarter SEC filing said it would renegotiate or cancel some options for land to adjust to market conditions. It's not the only builder doing so.
In the quarter that ended in August, Miami-based Lennar (NYSE: LEN) said it wrote off $15.8 million in option deposits and pre-acquisition costs, more than five times the $2.9 million in the previous year's quarter.
Florida Condo preconstruction deposit recovery
William Friedman, chairman and chief executive of New York-based Tarragon Corp. (NASDAQ: TARR) said his company, which is active in South Florida, has also walked away from a number of Florida deals, primarily on the west coast.
"We have adhered to our strict underwriting criteria and have, in some cases, renegotiated terms and, in others, walked away from contracts and written off pursuit costs," Friedman said in August.
"We know that deal walk-aways are happening around the state from anecdotal stories we are hearing," said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. "Combined with conversion reversions, it's hard, at this point, to judge the depth of the trend or what the long-range impact will be."
It is not just new condo deals that are feeling the effects of a market slide.
Some condo conversion buyers who bought at the very top of the market are now faced with a dilemma, according to Robert Given of CB Richard Ellis.
"They can sell now to another converter or investor for a $10 million loss, convert the project now for a $2 million loss or renegotiate a term loan and hold as a rental community until the market changes," he said.
McCabe sees a market slowdown as an invitation for traditional investors and bargain hunters to move back into the multi-housing market.
As cap rates have climbed higher than 5 percent throughout Florida, traditional rental community operators can now buy based on the rent rolls.
Atherton-Newport LLC, an Irvine, Calif.-based real estate and investment firm recently paid $16.5 million, or just under $86,000 a unit, for the 192-unit Country Lake Apartments rental community, on 24 acres in West Palm Beach.
Nicholas Lizotte, acquisitions director for Atherton-Newport, said his company plans to update and reposition the 21-year-old rental property with $1.8 million in improvements and reopen units damaged by Hurrican Wilma.
"We are running at 99 percent occupancy on the occupied portion already," Lizotte said. It's Atherton-Newport's third buy in South Florida, and a fourth should be closed shortly, according to Lizotte.
Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Florida 33335
954-527-1512(South Florida Area)
1-877-527-1512 (Toll Free outside South Florida)
info@go2closing.com
http://www.go2closing.com
Labels: condo, deposit, down payment, florida, miami, preconstruction
posted by Deposit Recovery Services @ 10:53 PM
