Luxury Off-Downtown Miami Condo Tower Faces Record $216M Foreclosure
The 47-story, 346-unit luxury Paramount on the Bay condominium community isn't even finished and the lender is already at the front door with a foreclosure notice.
If the foreclosure is approved by the court, it would be one of the largest of its kind to date in South Florida, according to persons who regularly track condo foreclosure actions.
South Florida Business Journal reports iStar Tara, an affiliate of New York City-based iStar (NYSE:SFI), filed a foreclosure lawsuit March 19 against Paramount developer Royal Palm Miami Holding and Daniel Kodsi, the principal and CEO of Boca Raton-based RPC Holdings, according to Miami-Dade County Circuit Court records.
"We are working in an effort t turn it over to them," Kodsi told South Florida Business Journal. "Our goal is to protect the integrity of the building and work with our lender." Kodsi won't oppose the lawsuit.
Kodsi's company is in the process of giving back several other development properties in Miami amid foreclosure complaints, according to SFBJ.
The weekly publication reports RPC broke ground on Paramount in April 2006. Later that year, it secured a $216 million mortgage from co-lenders Corus Bank and iStar, plus a $30 million mezzanine loan from Babcock & Brown.
Corus Bank failed last year, and its share of the loan was assigned to a joint venture between the Federal Deposit Insurance Corp. and Starwood Capital. On March 3, the joint venture assigned the full interest of the loan to iStar.
The condo site at 2066 N. Bayshore Drive in Miami had the house used in the move "There's Something About Mary." The house was damaged in a 2008 crane collapse that killed two and injured five Paramount construction workers. The incident caused major construction delays. Groundbreaking was in 2006.
Condo Vultures LLC principal Peter Zalewski told SFBJ Paramount has an attractive design and quality construction. However, its units are too big to price competitively, and it is in a Biscayne Boulevard submarket that isn't as desirable as Brickell Avenue or downtown Miami, he says. Many of the units were presold for more than $1 million and exceed 2,000 square feet.
"It's a nice product and decent location, but the wrong time," Zalewski says. "The units are way too large for this market, especially at a time when people are trying to contract."
Zalewski told SFBJ the lender should try converting Paramount into high-end rental project when the real estate market improves. But, it must also front money to finish construction.