Last week I described a multifamily development limited partnership where the general partner decided to build high rise condos rather than garden-style apartments. Here is a a follow-up article from today's Wall Street Journal on struggling condo financier Corus Bank. This bank is in trouble:
While many lenders are being hurt by the condo crash, Corus is particularly vulnerable. Condo-construction loans accounted for nearly 75% of the lender's commercial real-estate loans. Some 41 of the bank's 85 condo-construction loans were in default at the end of 2008, and an additional 23 condo loans were considered "potential problem loans" at risk of default. In Florida, all but three of 20 condo loans were in nonaccrual, the company said last month.Ouch. The vultures are circling and here is why:
Most of Corus's loans are in Florida, Southern California, Las Vegas and Atlanta. Many of these markets are at the epicenter of the housing collapse.
Analysts say that Corus's loans could be attractive because they weren't syndicated or sliced up into securities. As a result, foreclosures on the properties wouldn't be subject to lawsuits from other lenders. In addition, many developments financed by Corus are high-quality properties in major metropolitan markets.
"Corus made loans on many of the most important properties in Florida, and control of those assets could translate into a very significant windfall" over the long term, said Robert Kaplan, chief executive of Olympian Capital Group, a real-estate investment firm.