Icon Brickell Developer Agrees to "Friendly Foreclosure"

May 12, 2010 by Lucas Lechuga

Yesterday, The Related Group and its lenders agreed to a “friendly foreclosure” for Towers 1 and 2 of Icon Brickell. This video provides our commentary as well as the details pertaining to the agreement.

Leave a Reply

87 Comments on "Icon Brickell Developer Agrees to "Friendly Foreclosure""


Sort by:   newest | oldest | most voted
Anonymous
Drew
6 years 4 months ago

I guess KW Realty lawyers are nervous about another Tibor Hollo-like lawsuit…that may be the most ridiculous, all-inclusive legal disclaimer I’ve ever read.

Anonymous
Joe
6 years 4 months ago

Drew — I was just thinking the same thing. Gotta love the lawyers.

——

Lucas — Nice job with these videos. I’m still not overly bullish about the Miami market, but I admire the effort you put into this site, the videos, etc. Really well done.

Anonymous
6 years 4 months ago

Thank you Joe! I appreciate it.

Keller Williams isn’t even aware of the videos yet. I decided to add the disclaimer myself. Figured it’s better to be safe than sorry later.

Anonymous
Wild Bill
6 years 4 months ago

Historical failure. Memories of 1980.

Anonymous
scrivener
6 years 4 months ago

Wow! The proverbial pink elephant of real estate goes down! Darwin rules!

It’s about time. Not that I want to see this or any building go under. But these artificially, and unrealistically, bloated prices need to be adjusted; putting them more in parity with the supply and demand curves operating in Miami’s real estate market. Foreclosure, though a bitter pill, is the only way that this is going to happen because of the legal obligations involved.

scriv

Anonymous
Elvis
6 years 4 months ago

I read in the miamiherald that related group will manage the properties still. So I don’t know if this is an iconic failure or not. related group will still make tons of money without having the large loans to repay.

It will be interesting to see what HSBC does, I assume a few large bulk sales.

Anonymous
lara
6 years 4 months ago

They do not have to do bulk sales though it might happen. Just realistic prices like Infinity did and condos will be purchased.

Anonymous
Gixxer 1000
6 years 4 months ago
I agree with Elvis. Hardly an epic failure and prices most likely wont go down much. Icon has been selling gangbusters since the beginning of this year. They sold over 300 units in the first four months selling 126 units in April alone. Now the current prices may not have been enough to keep it in the hands of the Related Group but I don’t see anything indicating that HSBC is going to need to lower prices further. A bulk sale would definitely help speed up the process but other than that I would assume that with sales clearly picking… Read more »
Anonymous
Inna
6 years 4 months ago

what is going to happen to all the peoplw who own units there?

Anonymous
Drew
6 years 4 months ago

While the overall project over time may not be deemed a “failure,” it definitely was a failure from the developer standpoint. Millions of TRG’s and/or their limited partners’ $ was wiped out.

They went from being the owner/developer to property manager. That’s like going from company president to company janitor.

Anonymous
DML
6 years 4 months ago

Good job on the video Lucas.

I agree with Lara, Elvis and Gixxer 1000. The foreclosure process is more of a legal formality. For those Bears still sleeping in the woods, there is only one direction that the condo market is going and that is up. Maybe at a much slower and disciplined pace, but up. We are coming out of a very big recession and absorption of condos in the Miami market will take time.

DML

Anonymous
Mark
6 years 4 months ago

Price adjustments may occur, but not too much.As much as I would like to see 2bd going for 300k adn 3 bd for 500k, it is highly unlikely that is going to happen.
Icon Brickell is a great project and in the future willl be a landmark in Miami.
Bad timing and not a project for the average buyer, though.

Anonymous
SLOTH
6 years 4 months ago

I wonder why they only seized towers one and two? any ideas?

Anonymous
DJ
6 years 4 months ago
DML, I agree with you. Things do appear to be on the rebound here for the most part. What surprises me is the speed at which we got to this point. A year to six months ago the majority of posts on here were from “doom and gloomers;” a lot of them talking about prices dropping another 50% and a recovery taking 10 years or more. I wouldn’t say we’re out of the woods yet, but things are stabalizing, and some select buildings or general areas are seeing modest price increases. Recovery will be slow and prices aren’t gonna shoot… Read more »
Anonymous
why bother
6 years 4 months ago

DJ, I concur. 6-12 months ago, someguys were predicting that it will take years and years for the 22000 condos to get sold by the developers. but by spring 2010 most developers are running low on inventory. By the end of 2010, I predict there will be no developer owned units left. What an astonishing turnaround! In 2 short years since Lehman implosion and a severe recession, we are singing an altogether different tune.

Anonymous
why bother
6 years 4 months ago

Oh, not all doom and gloomers have left. Joe and wild bill are still stuck in the past and darkness. would someone crack open their basement vent and let some light in please (and tell them it is bright and beautiful outside, do not be afraid, come out gently, you are safe).

Anonymous
SouthBeacher
6 years 4 months ago

Lucas, I don’t like the videos. It’s harder to be discrete about my time-wasting-web-antics-at-work while listening to a video. Its much easier to look busy reading a screen vs listening to a video!

Anonymous
scrivener
6 years 4 months ago
Sloth: My guess is that this is why the foreclosure was so “friendly” …. just a guess. I am assuming that the Viceroy is merely a tenant/operator and has no material ownership stake. Under such a scenario, Viceroy came in, with its brand name and reservation system, to operate the hotel aspect of the development. Under such an assumption, Related retained the rights to the profits, operation and management of Tower 1. Put another way: Related and its lender “divided the pie” and Related got what it thinks is the part with, at least on a near-term basis, the least… Read more »
Anonymous
BillP
6 years 4 months ago

Tower 3 has a different lender. There may be ongoing negotiations there, too.

Anonymous
6 years 4 months ago

The lender behind Tower 3 is Bank of America. A syndicate of lenders led by HSBC were behind Towers 1 and 2.

SouthBeacher,

If you watch the videos on the YouTube website you can use the “transcribe audio” feature so that you can read the speech instead of listening to it.

Anonymous
Joe
6 years 4 months ago

Boy, you guys are a bunch of dreamers. Now I know how the Miami market got so overheated in the first place.

If you think foreclosure is “just a formality” or that this bank is happy to be the proud new owner of over 1,000 unsold condo units, you’re out of your minds.

Anonymous
RA
6 years 4 months ago
Still way overpriced. To bad for all those 400-500 people that rushed to buy in now. Bottom line is if these were realistically priced in the 200k – $350k they would sell just fine and prob sell out very fast. No one talked about HOA dues on this and now it’s low cause the bank’s covering it all but can you imagine once this get’s turned over to the condo board how the HOA fees will sky rocket!! Also on another note I checked out Infinity and honestly wasn’t very impressed with the units themselves. Bldg seemed nice and all… Read more »
Anonymous
scrivener
6 years 4 months ago
Joe: You are so correct! Foreclosure ain’t no mere “formaility.” Rather, it is financial Darwinism in action- – Nature’s way of killing the weak as well as redistributing, revaluing and restructuring their assets. I agree with you one-hundred-and-ten-thousand percent that the lender is not happy to be the owner of these units. Nor is the building’s HOA, I imagine. This property was horribly over priced, over hyped and, simultaneously, under-planned, thought out and designed. But it did make a nice set for a scene from Burn Notice….didn’t it? As I have said in the past, we live in interesting times.… Read more »
Anonymous
Renter Tom
6 years 4 months ago
Don’t worry, the “bears” aren’t dead! One has to ask oneself, if the condo market has already bottomed and on the upswing, why this huge foreclosure, “friendly” as it may have been? This was THE project and so ICONic of the housing bubble as it goes belly up. They were one that people thought could “hold out” and “go the distance” and that “no way” the project would go into foreclosure. Oh, if we could only believe the hype. Clearly, the condo market in our area is still bottoming. From there it will remain anemic. There will be no jump… Read more »
Anonymous
reader
6 years 4 months ago

From first hand experience, I would say that 75% of the new buyers in brickell are from south america and they all buy CASH. They are diversfying out of south america and into the dollar. Some even have to buy dollars on the black market to close in the states (cough, chavez, cough).

Crazy as it seems a busted condo market is a safer bet in the long run then holding argentianan, columbian or venezualan pesos. At least you know the dollar won’t evaporate.

Anonymous
gables
6 years 4 months ago

reader, you may be right. but for a second home which is an investment, taxes and hoa are a brutal cost to pay unless you can expect rentals to cover that cost plus interest on the cash. if i were south american, better move is just to park in short or medium term bonds. they must have alot of faith in real estate appreciation over the next decade. guess that is where many on this board disagree with each other.

Anonymous
6 years 4 months ago
http://www.aolnews.com/money/article/with-tax-incentive-gone-home-sellers-looking-to-deal/19476702 Nationwide, the actual price reductions average 10 percent, but in many major cities they are well above 10 percent, according to the numbers Trulia.com released this week. But in May, after the tax credit expired for most Americans, 12 of the largest 50 cities across the nation had 30 percent or more of their listings experience price reductions. By contrast, in April, only five cities had 30 percent or more listings with price reductions. Among the nation’s largest cities, the steepest price reductions came in Detroit, where they averaged 24 percent. Average price reductions were 15 percent in Las… Read more »
Anonymous
reader
6 years 4 months ago

Gables –

I am sure some of these players are doing that as well. I agree with you and that is partly the reason I have not bought a condo as I would just rather store my cash somewhere else at the moment.

Second reason is that studies show that in order to come out ahead of a renter in the rent vs. buy scenario, a buyer needs to stay in their residence for at least 7 yrs. After that though its exponentially better for the buyer, the problem is getting to the 7 yr mark.

Anonymous
Renter Tom
6 years 4 months ago

gables – My take on the S. Am. buyers are that a condo purchase in Miami serves several purposes most of which make the economic/investment component irrelevant to the decision. Sorta like building a bomb shelter that doubles as a vacation pad and preservation of wealth. Owning a home outright in the States offers peace of mind…and a way to launder money (before more political upheavals)…so the taxes and HOA dues are minor in comparison.

Anonymous
Joe
6 years 4 months ago

I agree completely with Renter Tom’s post #28. People need to remember that a lot of the people from Mexico and Central and South America who buy condos in Miami aren’t exactly spending hard-earned dollars to do so.

As was true in the ’80s and ’90s, many if not most of them are simply looking to stash the money somewhere, preferably somewhere that gets the money out of their home countries (and currencies). Being able to stash the money somewhere “safe” is worth any potential losses on HOA fees, opportunity costs, etc.

Anonymous
gables
6 years 4 months ago
RT, also won’t disagree with you. but you may pay 4% on your capital to hold that property, plus loss of use for additional income. my point was if you are simply moving your money from an unstable to more stable environment-RE is not the best move. but i certainly understand the nonfinancial incentives as well. reader, the 7 year argument will be put up for discussion in the coming years. in the days of yore, people held a single job in one area long enough to reach 7 years of home ownership. i myself have held 4 different jobs… Read more »
Anonymous
Joe
6 years 4 months ago
Just to continue my thought from my last post (~ #29), one of the problems with foreign buyers in Miami’s r.e. market is that they don’t have as much skin in the game as buyers from the U.S. During the boom, a lot of foreign buyers bid up the value of Miami r.e. by getting cheap mortgages from which they could (and often did) walk away scot-free (unlike Americans whose credit rating would tank under similar circumstances). Now, a lot of the foreign cash buyers seem to be spending their ill-gotten cash profligately, which also skews the market unfavorably for… Read more »
Anonymous
Drew
6 years 4 months ago

Renter Tom- Welcome back. Why the hiatus?

Since your persona in my mind is that of a 65-yr old man, I thought maybe you had died.

Anonymous
DML
6 years 4 months ago

Reader hit the nail on the head! Foreign buyers from some of the Latin American countries have more important financial and risk management goals other than just trying to get a decent return on a real estate investment. The flight capital from some of these countries has and will continue to impact the Miami real estate market.

Anonymous
Renter Tom
6 years 4 months ago
Drew – Thanks for the diss…perhaps if you divide that in half you’d be a heck of a lot closer to my age. Just thought there was no point in posting with all the nonsense posts…cutting and pasting entire articles versus just a short quote and link made it sorta unreadable and tedious. Clearly there is no point in arguing about the real estate market here since it is intuitively obvious to the most casual observer what is going on. Prices are on a “rebound” now or next year. Perhaps I was just waiting for the miamicondoinvestments iPad app! Actually,… Read more »
Anonymous
DJ
6 years 4 months ago

Intersting points being made about south americans parking their money here. Makes perfect sense. I think this current recession taught us all that we’re not bullet-proof, but at least we have the luxury of having a relatively stable economy. Granted, real estate might not be the best investment for a wealthy south american, but I guess the added bonus of having your investment also be a vacation home in Miami is appealing.

RT, welcome back dude. Let’s hear about the short sales you’ve been looking at.

Anonymous
andi
6 years 4 months ago

well RE prices in Miami/USA are closer to bottom..upper end sofla homes would need another 20% cut before price/rent mismatch disappears..and this in the face of 20% un+under employment is a cinch…

But major harikari in RE is going to happen abroad…massive price plunges in canada, OZ, UK,China, India etc are coming…Brace for it…

Anonymous
Joe
6 years 4 months ago

andi — I agree about the pricing of upper-end Miami r.e., but I haven’t seen much movement to that effect so far. I guess wealthier speculators/investors can hold out longer. There are high-end buildings on the Beach at which there have been no more than 2-3 sales all year, but prices are still holding at the crazy boom-era levels (or thereabouts). Some of these buildings are still easily 50-plus percent investor- and/or developer-owned. It will be interesting to see what happens over the next 6 months.

Anonymous
Gixxer 1000
6 years 4 months ago

More info regarding cash buyers:

http://www.condovultures.com/home/5663-cash-buyers-acquire-83-of-new-condos-in-greater-downtown-miami.html

According to CondoVultures cash buyers made up 83% of the sales in downtown.

Anonymous
scrivener
6 years 4 months ago
“Right you are. I have heard it from the lips of many non-Americans that they will just not pay there mortgage” Renter Tom If true, that is a truly disappointing fact. But, like they say, money can’t buy many things….among which is class. My concern for South Florida real estate is, however, not so much the individual loser/purchaser who decides to flip their lender the bird and walk away from their mortgage and HOA obligations. Individuals are easier to deal with. My concern is the financial stability of these financially strapped “luxury” condos whose units have been bought in bulk… Read more »
Anonymous
Renter Tom
6 years 4 months ago

I agree on the upper priced condos…most have held firm on pricing BUT they are not selling! So, we shall see the price declines in that area of the market continue for some time.

Anonymous
Joe
6 years 4 months ago

Renter Tom — Have you actually been seeing downward price movement in the higher-end market (especially in Miami Beach)? There have been so few sales, especially in my main areas/neighborhoods of interest, that it’s hard to tell what the hell is going on. Just from the MLS, it looks like a big stalemate.

Anonymous
Gixxer 1000
6 years 4 months ago
Inventory and sales on a percentage basis are actually better in Miami Beach when looking at higher price points. Inventory at the end of April for Miami Beach: All units (2841 units) 149.16 average sales per month = 19 months 0 – $200k (868 units) 59.16 average sales per month = 14.6 months $200 – $299k (456 units) 27.83 average sales per month = 16.38 months $300 – $399k (372 units) 19.16 average sales per month = 19 months $400 – $499k (252 units) 10.16 average sales per month = 24.8 months $500 – $750k (344 units) 12.83 average sales… Read more »
Anonymous
Renter Tom
6 years 4 months ago

Joe – Had looked at Sunny Isles Beach area … on the beach … be sure to check out the list prices versus what they actually sold for.

Anonymous
Joe
6 years 4 months ago
Gixxer 1000 — Not sure what your point is re: the above chart. Miami Beach is the highest-priced area of Miami’s r.e. market, so if you exclude Miami Beach, it skews the numbers. No big news flash there. You also didn’t break the inventory down into more revealing segments, e.g., $1,000,000 to $2,000,000, $2,000,000 to $3,000,000, etc. Miami Beach has well over 5 years’ worth of inventory in the truly high-end segments, which you hid by including those units in a catch-all $750,000-plus segment. The point I (and Renter Tom, et al.) have been making still stands: Unlike downtown, which… Read more »
Anonymous
Renter Tom
6 years 4 months ago

Another month-over-month home price index decline…the “double dip” is on…..or really the one large slide continues with a small government induced bump on the way down. Knife catchers…..

Anonymous
Gixxer 1000
6 years 4 months ago
Joe, “The point I (and Renter Tom, et al.) have been making still stands: Unlike downtown, which has seen big price cuts and a lot of sales, the high-end market in Miami Beach is almost entirely stagnant. As a recent Miami Herald article (just posted in one of the other threads) pointed out, just *17* new condos were sold in Miami Beach in Q1 2010. That’s an atrocious sales rate / stagnant market by any measure” First my point was pretty clear. Miami Beach is in a much better position than Downtown or the rest of Miami-Dade county for that… Read more »
Anonymous
Gixxer 1000
6 years 4 months ago
“Another month-over-month home price index decline…the “double dip” is on…..or really the one large slide continues with a small government induced bump on the way down. Knife catchers…..” What in the world are you talking about??? First off, new price index numbers don’t come out until next Tuesday. Second, the home price index is always two months behind so even when those numbers do come out Tuesday the numbers will be for the month of March. http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us—- They took down the numbers for January and February 2010 so right now they only have the numbers up until December 2009. However… Read more »
Anonymous
Gixxer 1000
6 years 4 months ago

Further info as evidence against current price declines:

http://dqnews.com/Charts/Quarterly-Charts/Miami-Palm-Beach-Charts/ZIPFLDADE.aspx

If you look at zip code 33131 which covers Brickell and the main portion of downtown it posted ANOTHER quarterly increase.

Anonymous
Joe
6 years 4 months ago
Gixxer 1000 — First, I love how you cherry-pick the data you use in your little rebuttals. The discussion we’ve been having here has been re: new condos, so I don’t really care about the resale numbers. Second, how do you figure high-end prices have “stabilized” when there aren’t any sales happening in those segments? Again, there were *17* sales of new condos in all of South Beach* for Q1 2010. Entire buildings have gone 60 to 90 days (or more!) without a single sale. Does that sound like a “rebounding” or “stabilized” market to you? (* You do understand… Read more »
wpDiscuz

For Real Estate
Related Needs And Inquiries

please complete the form below

  • This field is for validation purposes and should be left unchanged.