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(This story, in slightly different form, originally appeared in ALM’s Daily Business Review.)

MIAMI-When Robert Lechter heard Banco Popular North America was selling a note secured by a recently completed condo tower in Miami’s Brickell area, he knew it was no time to be timid. Lechter says he won the bidding with a $10.2-million offer for an $18-million note secured by the 62-unit Brickell Station Village.

Besides offering $1 million more than the second-highest bidder, he agreed to pay cash and to put down $2 million soon after Banco Popular accepted his offer. “I pursued it very hard,” says Lechter, principal of REMS. Group, a Hollywood-based developer. “In these transactions, you have to be aggressive.”

The condo’s developer, Royal Explore Development, signed the project over to Lechter’s company at the same time REMS closed on the purchase of the note in mid-August. The total cost per unit was about $164,500.

“It was almost like a short sale,” Lechter says, adding that he plans to rent out the units for three years and sell them when the market improves. Lechter is among a growing number of investors who are buying distressed notes at big discounts as lenders step up efforts to shed bad assets and cut the cost of carrying unwanted projects.

“That’s the most advantageous way to [buy real estate,]” said real estate attorney Carlos Castro. His Coral Gables law firm, Castro Ramirez, represents investors and about 15 banks in note deals.

Banks have been marketing non-performing loans since the housing market collapsed in 2007. But in the past six months, some lenders have begun to accept a lot less than the face value of the notes.

Note sales are not recorded with a county’s clerk of court and are not public record. Unless the note buyer or seller releases the information, it is almost impossible to find out details of the deal.

Last month, Hugo Amaya, president of Osaka Air in Hialeah, purchased a note secured by a condo tower in Miami’s Wynwood district, north of downtown. He and business partner Vicente Carrillo, operating as Wellmeaning Properties, paid $8.5 million—less than a third of face value— for a $25.3-million note backed by 97 vacant units in the 101-unit Cynergi building, says real estate broker Jeff Morr, who represented the bank in the transaction.

Days after the Sept. 30 sale, another investment group offered to buy the note for $12 million from Amaya’s Venezuelan investment group, says Morr, chief executive officer of Majestic Properties in Miami. “But the buyer doesn’t want to sell,” Morr says.

A spokesman for Banco Popular said the lender’s executives would not comment on the transactions but said the bank is actively marketing notes in South Florida.

Note buyers are also interested in other types of real estate besides condos. In mid-July, New York real estate investor and hotel operator United Capital Corp. acquired a $40-million note secured by the DoubleTree Miami Mart Hotel and Convention Center near Miami International Airport. The lender was Gramercy Investment Trust in Maryland.

A week later, Great Neck, NY-based United Capital took title to the 334-room hotel through a foreclosure auction. United Capital chief financial officer Anthony Miceli declined to say how much the publicly traded company paid for the note.

Real estate consultant Adam Lubkin, president of Ibis Development Group in Miami, says there are two reasons notes are increasingly changing hands. One reason is lenders are reducing their asking prices. The other reason is as more buyers show interest in notes the prices investors are willing to pay are also rising.

“More buyers are getting anxious because they want to buy something, and [at the same time] some of the banks are becoming more flexible,” Lubkin says. “When it is that close, you figure out a way to get the deal done.”

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