Condo Vultures® Realty LLC

BY JIM FREER
CondoVultures.com

Federal regulators late Thursday afternoon seized Coral Gables-based BankUnited, FSB, the largest bank based in Florida, and sold it to a newly formed savings bank with the name, BankUnited.

BankUnited's new ownership is a consortium of investors that includes John Kanas, a veteran New York banker who will head its operations beginning Friday, May 22, and New York-based investment firm WL Ross & Co. The investors are putting $900 million in capital into the bank.
Bank United, FSB, had $12.8 billion in assets and $8.6 billion in deposits as of May 2.

The bank had been suffering heavy losses, stemming mostly from its portfolio of "monthly option" adjustable rate mortgages. South Florida condominium units were prominent among its growing volume of non-current loans and foreclosures.

BankUnited had been under regulators' orders to find a buyer or raise capital, and regulators had been directing those efforts since late last month. A change in control was widely expected by the end of this week.

The Federal Deposit Insurance Corp. said others in the investment consortium are: Carlyle Investment Management L.L.C.; Blackstone Capital Partners V L.P.; Centerbridge Capital Partners, L.P. LeFrak Organization, Inc; The Wellcome Trust; Greenaap Investments Ltd.; and East Rock Endowment Fund.

The WL Ross-led group was one of several groups that reportedly submitted bids for BankUnited.

BankUnited's 86 branch offices, all in Florida, will be open Friday during normal business hours. All deposits acquired by the new owners will be insured by the FDIC.

Customers can continue to use BankUnited, FSB's, checks, ATM cards and debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

On Thursday, The U.S. Office of Thrift Supervision (OTS) acquired the banking operations, including all the non-brokered deposits, of BankUnited in a transaction facilitated by the FDIC.

The FDIC, as receiver, then arranged the sale to the group led by Kanas and WL Ross.

Details of the regulators' takeover are on the FDIC's Web site.

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Jack McCabe, a national real estate consultant who early on predicted Florida's boom and bust, has confirmed his participation on the upcoming Condo Vultures® panel discussion examining South Florida rental rate trends and the never-ending quest for double-digit cap rates on residential investment properties.

McCabe, president of McCabe Research & Consulting in Deerfield Beach, Fla., is a real estate consultant, expert witness, and advisor to institutional funds who is regularly quoted locally, nationally, and internationally on housing issues in Florida and beyond.

McCabe joins Alan Ojeda, developer of the new high-rise rental tower One Broadway in Miami's Brickell Avenue area, on the Condo Vultures® Seminar Series June panel discussion on South Florida rental rate trends.

McCabe and Ojeda join a soon-to-be-announced Florida bank president and owner of a large condo association management company for a discussion with Condo Vultures® principal Peter Zalewski about the current and future trends in South Florida's rental market.

The June 16 program is scheduled to feature a networking session, panel discussion, and question and answer period with the panel. For more information, visit the Upcoming Events page at CondoVultures.com.

Peter Zalewski of Condo Vultures® can be reached at 80... or by email at peter@condovultures.com Don't forget to sign up for our weekly Market Intelligence Report^TM for detailed condo reports. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database^TM. Our new books, the Official Condo Buyers Guide to Miami^TM and Miami's Great Condo Crash: A Chronicle of the Boom and Bust^TM are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database^TM.

Copyright © 2009, Condo Vultures® LLC

BY JIM FREER
Special Correspondent

The Federal Deposit Insurance Corp. has set next month as the target date to launch its program where banks will sell pools of problem loans to partnerships of private investors and the U.S. Department of the Treasury.

The regulators hope that participating banks will be able to put more focus on lending, including money from loan sales, and spend less time and expense managing delinquent loans.

However, information from banking and real estate sources indicates that the long-awaited Legacy Loan Program might not get off to a fast start.

Some bankers are concerned that prices for many delinquent loans sold in the program might be lower than the discounted prices at which they are carrying them on their books.

Interest in the program appears stronger from investors, such as large institutional funds and Florida-based real estate developers, than from banks that have delinquent loans.

Several, most notably Wells Fargo predecessor Wachovia Corp., were active earlier this decade in making loans for building and renovating condominium projects in South Florida and other markets.

The chance for investors to put as little as seven percent down on some loans with partial FDIC guarantees is a main attraction, said Nina Gordon, a partner in the Boca Raton office of law firm Broad & Cassel.

"They think they could have access to some treasures buried in vaults," Gordon said.

Those "treasures" would be loans for now-troubled condominium conversions or construction of condo complexes and apartment buildings that could become viable projects after the economy recovers.

Numerous banks with offices in South Florida have loans on those properties that are 90 days or more delinquent. Many have been restructuring loans by cutting monthly payments or interest rates. They have had hopes, now fading, that borrowers can catch up on payments and avoid foreclosures.

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Jim Freer is a special correspondent for CondoVultures.com. He is a veteran banking reporter and a consultant to the finance industry in South Florida.

South Florida residential pending resales spiked 3.5 percent in the last week to 15,191 existing contracts in Miami-Dade, Broward, and Palm Beach counties, according to a new report from Condo Vultures® LLC.

Pending sales in Broward County, where Fort Lauderdale, Hollywood Beach, and Pompano Beach are located, surged 4.3 percent to 5,820 deals on a week-over-week basis ending May 18, according to the report produced using Florida Association of Realtors data.

Pending sales in Palm Beach County, where West Palm Beach, Delray Beach, and Boca Raton are located, increased by 3.7 percent in the same period to 2,691 contracts. Pending sales in Miami-Dade County, where Miami Beach, Coral Gables, and Sunny Isles Beach are located, increased 2.7 percent to 6,680 contracts, according to Condo Vultures®.

"Buyers and sellers are entering into contracts in South Florida at a stepped up pace," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate services company Condo Vultures®. "As properties go under contract, the total available residential resale inventory has consistently decreased. In the last six months, inventory has fallen by more than 20 percent."

South Florida currently has 85,705 condo units, townhouses, and single-family houses available for resale in the tri-county area. The week of Thanksgiving, there were 107,527 residential properties on the market for resale, meaning that available inventory has fallen by 21,822 properties, according to the report.

Broward County has experienced the deepest drop in inventory in the last six months, falling 24.1 percent to 28,039 resale properties. Miami-Dade County has experienced a 21.1 percent drop in inventory to 32,348 properties. Palm Beach County's inventory has dropped by 14.5 percent to 25,318 resale properties.

Condominium units and townhouses represent about 60 percent of the total inventory while single-family houses account for the remaining 40 percent. Back in November, condo units and townhouses represented 57 percent of the inventory, and single-family houses account for 43 percent of the South Florida total, according to the report.

Peter Zalewski of Condo Vultures® can be reached at 80... or by email at peter@condovultures.com Don't forget to sign up for our weekly Market Intelligence Report^TM for detailed condo reports. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database^TM. Our new books, the Official Condo Buyers Guide to Miami^TM and Miami's Great Condo Crash: A Chronicle of the Boom and Bust^TM are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database^TM.

Copyright © 2009, Condo Vultures® LLC

National real estate consultant Jack McCabe, one of the first analysts to predict South Florida's housing bubble and bust, projects that the Florida housing market is within a year of hitting bottom.

McCabe, president and chief executive of McCabe Research & Consulting LLC in Deerfield Beach, Fla., estimates residential values are within 15 percent of their lowest levels, and he expects the remaining price drop to occur in the next four quarters.

"I think 2009 is going to be the toughest year of this downturn for the state of Florida," McCabe said in an exclusive video interview with CondoVultures.com. "I really see next year - about mid-2010 - that, I think, we are finally going to reach the bottom, or what everybody has been calling the bottom."

The hour-long McCabe video interview where he discusses Florida's past, present, and future with Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures®, is available in its entirety in the White Papers section of CondoVultures.com.McCabe disagrees with some on Wall Street that Florida residential pricing will still fall an additional 35 percent in the upcoming months.

"I don't think it is going to be that severe," McCabe said. "I think the worst is behind us, but I still believe we have another 10 to 15 percent drop because of the unemployment and the foreclosures depressing prices, and the amount of inventory we have yet to absorb."

The bottom may be within McCabe's sight but he doesn't expect Florida prices to appreciate in the foreseeable future.

"I don't think it is going to be a V-shape recovery," McCabe said. "I think this is going to be more like an L shape [recovery]. We are going to see prices remain along that bottom potentially into 2012 before we see any type of appreciation at all. "When we do, it is going to be more in line with historical trends of about six percent [appreciation] a year. We have a ways to go yet."

Peter Zalewski of Condo Vultures® can be reached at 800-750-0517 or by email at peter@condovultures.com Don't forget to sign up for our weekly Market Intelligence Report^TM for detailed condo reports. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database^TM. Our new books, the Official Condo Buyers Guide to Miami^TM and Miami's Great Condo Crash: A Chronicle of the Boom and Bust^TM are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database^TM.

Copyright © 2009, Condo Vultures® LLC