Condo Tower Sells At 69% Discount In Miami's Coconut Grove

MIAMI, FL--A bulk buyer has purchased a majority of a troubled 30-unit residential condo project in Miami's Coconut Grove neighborhood (top left, middle right and bottom left photos) for $138 per square foot, representing a 69 percent discount of the average closed sales price in the complex to date, according to a new report from CondoVultures.com.

The buyer, a newly created Delaware entity called 27 Grove LLC, paid nearly $2.5 million on July 16 for the project's remaining 19 units with nearly 18,000 square feet in the South Two Seven Lofts condominium at the intersection of Southwest 27th Avenue and Bird Road, according to the report based on Miami-Dade County records.

"As the new, class A condo product disappears, bulk buyers are increasing being forced to look in the interior of the city for distressed properties," said Peter Zalewski, (bottom right photo)  a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC.

"This is the first bulk deal to occur in the artsy Coconut Grove district but surely not the last. Developers put up several small projects of 50 units or less in the area during the boom years that may or may not have sold out."

This is the 54th condo bulk deal to close in the tricounty South Florida region - 44 deals have been in Miami-Dade County - since July 2008.

 During the last 24 months, bulk buyers have acquired for nearly 5,000 units with more than 6.2 million square feet for $1.5 billion, according to the Condo Vultures® Bulk Deals Database™.

Besides the private equity groups, discount-minded, individual buyers are also picking off units, which is depleting the new, class A inventory.

An average of nearly 500 new condos traded per month in Greater Downtown Miami between April and June 2010, representing a 105 percent increase compared to the 241 units per month average in second quarter of 2009, according to a new Condo Vultures® White Paper™.

Transactions for nearly 1,500 units with 1.8 million square feet of saleable space generated a gross sales amount of $584 million, or $333 per square foot.

The flurry of sales activity has reduced the number of new condos under developers' control in Greater Downtown Miami to less than 5,100 units, according to the report based on the Condo Vultures® Official Condo Buyers Guide To Miami™.

The unsold new condos represent about 23 percent of the total inventory constructed in a 60-block stretch of Greater Downtown Miami between 2003 and 2010.

A year ago in July 2009 about 40 percent of the new condos in the same submarket were unsold, according to the licensed Florida brokerage Condo Vultures® Realty LLC.

In Coconut Grove, the South Two Seven Lofts condo was developed by Fadi A. Bahri's Grove Developers LLC in 2007. Construction on the project began in 2005 using an $8.4 million construction loan from Miami-based U.S. Century Bank, according to Miami-Dade County records.

Despite being completed just as prices in the Miami condo market were free falling, the developer was able to sell 11 residential units in the project for $3.7 million, or $444 per square foot, between February and November of 2008.

The project's two ground floor commercial units were also sold during that same period in 2008 for a combined $1.1 million, or $364 per square foot, according to the CondoVultures.com report.

Before the bulk deal, nothing had sold in the condo project in the last 20 months.

U.S. Century Bank filed to foreclose on the project's remaining 19 units in January 2010. The last time the constructon loan was modified in September 2008, the principal was set at $4.05 million, or $226 per square foot, and the maturity date for repayment was scheduled for July 18, 2009, according to Miami-Dade County records.

The 19 bulk deal units are currently assessed at a value of $5.3 million, or $296 per square foot, which is 53 percent higher than the bulk price paid, according to the Miami-Dade County Property Tax Appraiser's Office.

Contact: Peter Zalewski of Condo Vultures®,  800-750-0517 or by email at peter@condovultures.com