MIAMI-An Israeli investor has purchased the 19 remaining unitsat a 30-unit fractured condominium in Coconut Grove, a few milesfrom downtown Miami, in a short sale for $2.5 million or $138 persquare foot. The developer, Grove Developers LLC, whose managingmember is FadhiBahri, owed US Century Bank, a Doral-based bank,$3.9 million and in January, the lender filed a foreclosuresuit.

|

The original sales price for the first 11 units at South TwoSeven Lofts Condominium was an average of $444 per square footaccording to Bal Harbour-based Condo Vultures, LLC, a real estateresearch company. The buyer of South Two Seven Lofts Condominium,27 Grove LLC, is a Miami-based company whose principal is MeirSrebernik who is chairman of Israel-based Matav-Cable SystemsMedia.

|

“With hard and soft costs of about $180 to $220 per square footin South Florida for low-rise construction,” says Jack McCabe, CEOof McCabe Research and Consulting in Deerfield Beach, ” the $138square foot figure represents a considerable loss for both thedeveloper and lender.

|

“In a lot of cases, the first 70% of unit closings goes to paythe lender and the next 10% to 25% usually goes to pay secondaryliens, such as bridge loans, and equity partners,” says McCabe.“The remainder (of the proceeds) is what the developer gets,”he says, “although in a lot of cases, the developer makes money offof construction fees and puts a minimum amount of his own money inthe project.”

|

There are two ways to acquire a property, says McCabe. “If youbuy it in a short sale from a bank, you can make an offer,” forless than the amount of the mortgage, he says. This is easierfor the bank, because it doesn’t have to go through the foreclosureprocess which could take 12 to 18 months, says McCabe. In thiscase, the buyer purchased the 19 units at a 36% discount off theface value of the loan that the developer owed the bank, hesays.

|

Some of the condominium units off the water, when they have beensold in bulk, have gone for as low as $110 to $126 per square foot,says McCabe. In contrast, the average price for bulk buys indowntown, where many of the units are on the water, runs between$200 and $220 per square foot, he says. The Coconut Grove propertyis not on the water.

|

“Most owners of new condominiums rent for less than the monthlyoperating expenses,” says McCabe. “But after paying $138 per squarefoot in Coconut Grove, the buyer may be able to rent out units at apositive cash flow and sell them at a later date for a profit,” hesays.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.