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Posted on Monday, 10.12.2009

South Florida's beat-up condo market just got a major new player, Starwood Capital Group.

The Greenwich, Connecticut based private equity giant plans to acquire a large amount of Miami condos for sale construction loans and projects of failed Corus Bank shares from the Federal Deposit Insurance Corporation. This puts them in charge of roughly 21% of downtown Miami condos for sale. According to new research from Condo Vultures, this makes Starwood the second largest force in downtown behind the Miami-based Related Group, which held about 3,000 units at the end of the third quarter, or 36%.
 
Corus' $4.5 billion portfolio included about $1 billion in loans secured by condo projects in South Florida, almost all in varying states of distress. The rest of the loans back projects elsewhere in Florida and in Las Vegas, San Diego and Atlanta, among other spots.

This deal allowed Starwood to acquire a 40% equity stake in a limited liability company created to hold the Corus assets, the single largest sale of distressed Miami commercial real estate in the current downturn. $554.4 million in cash was the price, plus $1.38 billion in zero-coupon debt issued by the FDIC. Starwood Capital gets access to a $1 billion credit line to finish construction on incomplete Miami condos for sale as a bonus.

In September Federal regulators seized Chicago-based Corus and the FDIC is keeping a 60% stake valued at $831.6 million.
 
Before cash distributions will be made to Starwood both the credit line and notes must be paid off. Starwood pays 60 cents on the dollar for the former Corus portfolio, which, in South Florida, includes Paramount Bay and Mint in Miami, as well as Jade Ocean Condominiums in Sunny Isles Beach. The total purchase price is about $2.77 billion.
 
The deal allowed Starwood to buy the assets for what he said was likely an inflated price, since credit is still largely unavailable.

Developers and other Miami commercial real estate investors viewed Starwood's deal as a new marker for the region's real estate market.






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