Article Courtesy of The St.
Petersburg Times
By James Thorner
Published August 13, 2009
In one of the region's costliest property
foreclosures, Lansbrook Village, a 774-unit condominium complex in East
Lake, was repossessed by its lender Wednesday for failing to pay $75
million in debts.
Chalk it up as another victim of the condo
conversion craze that swept the Tampa Bay area five years ago.
Lured by stories of easy profits made with
easy-money loans, developers frantically converted more than 25,000 Tampa
Bay area apartments into condos between 2001 and 2006. The conversions
consumed about a fifth of the apartment stock in Pinellas and Hillsborough
counties.
But for lenders such as Corus Bank of Chicago, the
lender left in the lurch at Lansbrook Village, many Florida deals turned
out to be built on unfulfilled hype.
During the housing boom, Corus poured more than a $1
billion in loans into Florida for condo projects. Its record of success in
the Tampa Bay area has been mixed at best.
Across the bay in Tampa, the Chicago bank also lent
$84 million to Novare-Intown to build the Element, a 400-unit downtown
condo tower. Sales there collapsed along with the housing market, and
developers decided to lease units pending a real estate recovery.
It was clear by early 2006 that the conversion mania
was misplaced. In the Tampa Bay area alone, more than 10,000
apartment-to-condo conversions sat empty. Of the units that sold, most
buyers were investors.
"Investors dominated that market. In many
projects, investors were 75 to 80 percent of buyers," said Tampa Bay
area housing consultant Marvin Rose. ''There would be a project in Temple
Terrace and you'd have 100 buyers from Hialeah."
In the case of Lansbrook, in an unincorporated area
of northeast Pinellas County, Corus lent developer Vista Realty Partners
$112 million in 2006.
The Atlanta developer's acquisition of the former
apartment complex was ill timed. The conversion boom was largely over
before renovations were complete. Developers sold about 260 units for
between $100,000 and $250,000 before the housing market shriveled in 2007
and 2008. Vista decided to rent out units it couldn't sell.
"Now you've got a fractured community, one part
rented, one part owned," said Jeff Rogo of the Bay Area Apartment
Association. "For those that bought, that's clearly not what they
thought they were buying into."
The bank took back the common areas of the condo
property, including its three swimming pools, as well as the hundreds of
unsold apartments. The foreclosure has nothing to do with the Lansbrook
Golf Club or the single-family neighborhood of the same name.
Not that bank ownership could cripple property
values much more than the bum market already has. Lansbrook Village units
that sold initially for $150,000 generally fetch far below $100,000 these
days.
Steven Cobb is one of the buyers that scooped up a
foreclosure deal. Cobb said he bought the condo "dirt cheap":
$63,000 for a unit that once sold for $167,000.
Because he owns the condo, Cobb isn't sweating the
ownership change. Common areas could be a different story. "As far as
landscaping is concerned, that could be a problem," he said.
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