14 Unit Bulk Sale at Epic

A 32% price reduction? Not surprising at all. It is basic supply and demand: too many units available on the market and too few cash buyers cash buyers willing to play ball.

Nothing is gained from holding on to these units and waiting for the mythical “dream buyer” to finally appear (the buyer who will pay the seller’s “ideal” price) because he/she/they ain’t coming – – sell, sell, sell.

Still, one could reasonably argue that, in the absence of additional facts, the buyer got taken: $375 per sq. foot was more than reasonable fmv given market conditions.

Unfortunately for downtown Miami market, the majority of the units are, by-and-large, so similar – – even cookie-cutter like – – that, the knick-knacks and chachkis included with the units and properties aside, they are largely almost indistinguishable.

After all, “luxury” is a subjective construct. It is not a economic concept or method of valuation susceptible to empirical analysis.

What peaks my curiosity though is what do these bulk buyers do with these units? 14 units in Epic – – that is a lot of units. Are they completed, ready-to-move in units or are they merely – – – what’s the term – – “designer ready?” These and other questions.

Oh well.

Happy Friday guys.

scriv

if downtown/brickell does indeed work out…epic will be the best building of the lot

mike, just fyi condoreports . com shows that epic sold several 1 bedroom units for $348 per sf, so this bulk sale of 14 units for $378 is not the lowest in the building. Or are these 1 bedrooms part of the bulk sale you are talking about but you have a per foot price wrong, that per foot is actually $348 not $378.

08/10 3513 1 1 799 278,000 348 Beige World Invest Ltd n/a – – –
08/10 3611 1 1 822 278,000 338 Beige World Invest Ltd n/a – – –
08/10 3713 1 1 799 278,000 348 Antheos Holdings Ltd n/a – – –
08/10 3813 1 1 799 278,000 348 Beige World Invest Ltd n/a – – –
08/10 3913 1 1 799 278,000 348 Antheos Holdings Ltd n/a – – –
08/10 4013 1 1 799 278,000 348 Antheos Holdings Ltd n/a – – –
08/10 4213 1 1 799 278,000 348 Antheos Holdings Ltd n/a – – –
08/10 4313 1 1 799 278,000 348 Antheos Holdings Ltd n/a – – –
08/10 4413 1 1 799 278,000 348 Antheos Holdings Ltd

owner,
condoreports.com is notoriously inaccurate when it comes to listing the SF of a condo. In one building they were 90% wrong!! So the price per SF is completely skewed and screwed. Do not use that site EVER to calculate price per SF. If you just want to know the sale price and the date of transaction, they are slightly better off in that department.

One can never trust the bulk sale prices without reading the entire contract and financing deal. Sometime there are inflated or deflated sale prices with other adjustments. (Remember Barak Obama’s home purchase price in Chicago? – deflated home price and inflated land price!!)

Existing lenders can workout the financing terms to reduce or increase the upfront losses. This is big finance where you take a loss to show profit and take a profit to show the loss.

Another developer we met with was David Lombardi. His focus is on the Wynwood art’s district. He showed us the building he owners where the famous artist Romero Britto works and we also got to go into the unit that he leases to David Bromstad which he uses to film the show Color Splash Miami on HGTV. We also got to see another building which he leases and the owner runs a restaurant and art gallery called Cafeina (www.cafeinamiami.com). It was really nice.

I have to admit that the surrounding area looks like trash, but once you go inside the spaces are really great. It’s really an up and coming area. We also got to go into a property he developed called Museo which is basically a state of the art facility where you can store, view, package and ship you personal art collections.

Is it just me, or does building 2 stories of underground parking adjacent to water in a hurricane zone just seem like a really bad idea?

Gixxer, you’ve only been in Miami a few weeks and you’re already name-dropping like a pro…I guess you’re still a little star-struck. Oh well, you’ll adapt.

Topical relevance of posts 10-12 aside, I question the decision of Gixxer to post information the developer would probably prefer not be documented on a web site for the entire world to read. In a presumably off-the-record, candid meeting between developer reps and grad students, I doubt Swire contemplated that Gixxer would run to his computer to post every detail of their meeting. Or that a Wynwood landlord wants the whole world to know whom he leases to at what lcoation.

I’m not claiming that anything confidential/private/proprietary was disclosed, but you would think that one would show better judgment in choosing what information to post on the Internet, especially information that is not public record.

Gixxer have you ever heard of the phrase, “loose lipe sink ships?” For a guy looking to make a big impression in Miami, it seems like you’re off to a questionable start….

Drew,

The Brickell Citicentre project is listed on their website and they put up new signs and landscaping at the site.

If you think a company is really going to tell top secret information to a bunch of graduate students then you’re an idiot.

And it’s not like I’m name dropping celebrities or something. These are developers developing condos in Miami and with this being a Miami condo investment blog I’d assume some people might like to know. That’s the who purpose of a blog to, disseminate information quickly.

If you don’t find the information relevant then ignore my post and go back to arguing about really petty things.

gixxer, thanks for the info. glad you are settling into miami. the citibrickell info is interesting. i interpret that developers have scaled back significantly on plans for future construction in the area. they have also pushed plans out 4-5 years-who wants to bet this is at least 7+ years if it actually occurs? nevertheless, current residents will need to wait another 5+ years for additional retail in the brickell area. that suprises me-i really thought the area would get another retail center beyond the village much sooner. brickell really needs to fill in the infrastructure related to daily living asap. how big is the residential tower they are considering?

Gixxer, maybe you should try reading a little more closely. I’m not claiming you did anything illegal nor that anything was “top secret,” as you say. I’m just saying there may be some things in your posts that some of these individuals or companies would prefer not to be broadcast worldwide.

Its very simple. Ask youself this: If you told these parties at your meetings that you would immediately post an online synopsis (inclusive of their names, their titles, business interests, strategies, their lessees, etc), what do you think they would say? Do you think they would be ok with it?

Its not a legal issue. Its a matter of trust and respect.

Drew — You’re being silly. Unless these developers EXPLICITLY met with these grad students on an off-the-record basis, there’s absolutely nothing wrong with anything Gixxer 1000 did (or posted) here.

thanks dale. so the decorator ready unit at solaris can be had for under $190k at move in-not too bad. the building has a great location. have not been inside, so don’t know how it has held up in the past few years. but you get ocean views for the next few years until the empty lot across the street finally develops.

Budget Hearing 5 p.m. September 13 and 23 For City Of MIAMI……

http://globaleconomicanalysis.blogspot.com/2010/08/bankrupt-miami-in-fiscal-emergency.html

Is there serious consideration to a formal BK ?

Sarnoff mentioned it back in May……….

http://www.nbcmiami.com/news/politics/Miami_Budget_Crisis_Miami.html

With future Miami fiscal issues seemingly unsolvable (MANY other cities face the same struggle) a BK could be the cleanest quickest way to get the budget back in balance……

Wild Bill,
there is a ton of wealth in Miami. It’s actually Overtown, Liberty City and lower income bums like yourself that mess up the stats. The moment you leave Miami, the city will look better right away. Miami is corrupt for sure, but that’s part of the charm. You wouldn’t want Italy to look like Denmark, now would you?

Miami’s government is borderline hopeless. A BK might bring some salaries in line, but the same people will simply find different pockets from which to steal, so there won’t be huge improvements.

I posted a link about a year ago that summed it up nicely. In Miami, something like 500 “civil servants” made more than $100,000 last year (or was it $200,000 ??), while in Atlanta, a city much bigger than Miami, the number was *six* (6).

——

scriv — I agree re: the larger question being the future of the So. Fla. market in general. I get beat up here for being bearish, but I just don’t buy into the idea that demand will spike again within 3-5 years. People seem to forget that more new condos came to market in Miami in the last 6-7 years than in the previous TWENTY or THIRTY years added together.

Given that demand is still lagging for the current condos — i.e., two years or more of current inventory — and given that most of the newer condos turned into rental colonies as opposed to being the “luxury” owner-occupied condos promised in the glossy brochures, I can’t see another wave of “luxury” buildings being built in Miami anytime soon. I just can’t believe thousands of people will fall for the pre-construction condo trap less than a decade after the biggest r.e. bust in U.S. history.

gables — It seems we agree more than we disagree, but I disagree with you on this. Even if today’s early-twenty-somethings have some cash 3-5 years from now, I can’t see developers catering to them *or,* more importantly, banks going back to the easy-money, no-money-down policies of a few years ago. Plus, the bubble that just burst wasn’t driven by 20-somethings, so banking on 20-somethings creating the next one seems optimistic, especially when you look at the job market right now.

Israelis, Venezuelans buy condos as homes, investments

By Yudislaidy Fernandez
Many of the international buyers scooping up condos in South Florida’s top bayfront communities are buying to occupy part-time, brokers say, but many would consider a future sale at a profit.
Where these buyers decide to purchase depends in part to the condominium’s location, as some are more attracted to beachfront enclaves like Miami Beach, Sunny Isles Beach and Aventura while others want to be in the center of the action and opt for condos in greater Downtown in areas such as Omni, Brickell and downtown.
At the 66-floor Marquis Residences, one of Miami’s tallest buildings at 1100 Biscayne Blvd., many of the foreign buyers are from Brazil, Venezuela, Israel and Italy, said Wendy Marks Pine, sales director for Cervera Real Estate, which handles its sales.
For many of these buyers, she said, “their currency has increased in value, offering great opportunities for them to buy in the Miami market.”
For example, “we are seeing a heavy influx of Venezuelan buyers who have been able to allocate funds into US dollars” and are buying condos, Ms. Marks Pine said. “The challenge for those who are in Venezuela is taking the currency out of Venezuela to buy.”
Along the Biscayne Boulevard corridor, the cluster of performing arts venues, the neighboring art and design districts, the American Airlines Arena and the many restaurants that have sprung up are attracting Israeli buyers to Marquis, many of whom previously owned residences in North Miami Beach and other areas, said Penni Chasens, a Cervera sales associate.
“Miami is so multicultural it has something for everybody,” she said.
About 50% of foreigners are buying in cash and the rest are using a seller financing program Marquis offers, Ms. Marks Pine said, “allocated specifically for buyers who are coming in and need to finance. It’s unique to this building. Most buildings don’t offer that type of financing, so it’s an opportunity to get buyers here.”
The 292-unit Marquis has about 200 condos left for sale, with 92 sold or awaiting closing, she said. Lofts and two- and three-bedroom units are selling at discounted prices that range from the $400,000s to $3 million.
“It’s a combination of original buyers who closed on residences and new buyers who capitalized on opportunities with the 40% price reduction,” she said.
Edgardo Defortuna, president of Fortune International Realty, said at the luxury condominiums he represents, many foreigners are buying for their own use “because they love the product and think it’s a great value.”
Oceanfront residential towers such as Jade Ocean and Jade Beach in Sunny Isles Beach and ArTech in Aventura are being sold to many Latin Americans and Europeans.
For example at ArTech, where Fortune has 50 units left to sell, buyers are mostly Jewish Latin Americans and locals, Mr. Defortuna said.
At Icon Brickell’s Towers 1 and 2, Fortune has sold 170 units, of which about 75% have been sold to international buyers, he said. The same at Jade, home to buyers from 22 nationalities, where foreigners represent 70% of buyers.
Julián La Madrid, a Spanish-born developer based in Guatemala, bought a three-bedroom unit at Icon Brickell’s Tower 2 because he liked the property’s design and its location.
At first, he was debating whether to buy in Miami Beach or Brickell, but he opted for a bayfront unit on the tower’s 35th floor because he liked Brickell’s work-and-play lifestyle.
Mr. La Madrid, who develops office buildings and shopping centers in Guatemala, said he also saw value in the area’s fast development, as he foresees more retail and restaurants opening up in the future.
“The apartment is for me to use as a second residence, to live between Guatemala and Miami,” he said. “It’s not focused on investment, but I don’t discard that in the future it could become an investment.”
Brazilians represent another strong buyer segment right now, followed by Argentines and Venezuelans, Mr. Defortuna said. He added that among the reasons for the latter groups to invest here is safety concerns and political problems affecting those countries.
“The economy in Brazil is doing really well. In Argentina, the economy is also doing well, but they are concerned with the safety situation,” he said. “In Venezuela, the politician turmoil and the concern it could get worse has made a lot of Venezuelans have some safety net here in the US, and Miami is the perfect place.”
About 62% of foreign buyers purchase condos, 21% single-family homes and another 10% townhomes, according to an international sales survey conducted by the Miami Realtors based on transactions in Miami-Dade from April 2009 to April 2010.
These international buyers are helping condo sales stay strong.
While the re-sales of single-family homes in Miami-Dade dropped 8% in July, condo re-sales rose 43% this July from July 2009 and by 112% from two years ago, according to the realtor association and Southeast Florida Multiple Listing Service.
Many buying today plan to use the condos as a vacation or second home, but some don’t discard selling them at a profit some day.
But Mr. Defortuna described these as “solid” investors because more than 70% are paying cash.
“The investors who we saw in the good old days of the boom planned to sell or finance the rest of their purchase because they didn’t have the cash to pay upfront,” he said. “Also, the ability to rent the unit. If the price is right, the unit gets rented in a short period of time that makes it attractive.”

Joe
Would you agree that a lot of these units are being sold for less than their replacement cost?

George — I haven’t looked into current Miami prices for construction, materials, labor, etc., but aside from an occasional fire sale, I’m inclined to believe the whole “selling below cost” thing is just the latest marketing trick.

Most of the new condos were priced with VERY healthy profit margins built in. Prices have been slashed since 2007, but with inflation at or near 0% for 2-3 years in a row, I’m not sure where things stand in terms of replacement value.

In any event, regardless of the actual brick-and-mortar costs, I still don’t see a lot of value in most of these buildings, especially when you factor in the taxes, HOA fees, trend from owner-occupied to rental, and general cookie-cutter construction.

“Are Existing Home Prices Overrepresented By Up To 40%?”
http://www.zerohedge.com/article/are-existing-home-prices-overrepresented-40

” I agree re: the larger question being the future of the So. Fla. market in general. I get beat up here for being bearish, but I just don’t buy into the idea that demand will spike again within 3-5 years. People seem to forget that more new condos came to market in Miami in the last 6-7 years than in the previous TWENTY or THIRTY years added together.

Given that demand is still lagging for the current condos — i.e., two years or more of current inventory — and given that most of the newer condos turned into rental colonies as opposed to being the “luxury” owner-occupied condos promised in the glossy brochures, I can’t see another wave of “luxury” buildings being built in Miami anytime soon. I just can’t believe thousands of people will fall for the pre-construction condo trap less than a decade after the biggest r.e. bust in U.S. history.” – – -Joe

(sigh)

I could not have said it better myself. AMEN!

The other challenge facing further development of another round of similar cheesey, cookie-cutter, “luxury” (sarcasm) condos in the Miami area is that bank debt to equity ratios are only just beginning to recover. With 800+ banks on the FDIC’s “failing” list, the days of free money and LIAR/NINJA loans are over, done, kaput. Throw all the pre-construction parties you like – – play the loud music and pack the room with flashy, brain-dead, see-and-be seen celebs, etc – – the financing just won’t be there because the banks won’t take the risk. As securities investors no longer have the appetite or tolerance for sub-prime or similar mortgage-backed securities, lenders will not be able to shift the risk of loss through the derivatives market.

And, further, you can provide all the federal tax credits you want – – the demand will be, at best, synthetic and short-lived.

Developers like Swire and Related Group seriously dropped the ball. They flooded the market with too much product. When it is all said and done, it remains to be seen whether that many people are really interested in moving to Florida, let alone Miami. A service based economy with record-high unemployment (11.5% in July, up .7) – – who wants to move into that?

Right on Joe! You da man!

scriv

Sould have said investors not invesyors

Using EB-5s visas as a leverage vehicle for real estate financing?

I can’t wait to see how this pans out. This will be better than marriage fraud.

Giddy up!

scriv