Another Look at Corus Bank

December 1, 2008 by Lucas Lechuga

This has been a post that has been on my mind for over two weeks.

Before reading any further, please read the post I published on September 10, 2007 entitled, “Corus Bank – One of the Many Publicly Owned Real Estate-Related Companies to See Trouble Ahead“.  There are two things that amaze me most about that post.  One, the growth in the number of comments left by visitors astonishes me. That was one of the most informative posts that I’ve ever written yet it only received 6 comments.  Now, I write about a CVS opening at the base of Everglades on the Bay and there’s over 130 comments.  I guess, as they say “If you build it, they will come”.  Two, I’m amazed by just how dead on target my words turned out to be.

As the post mentions, Corus Bank had, and still has, significant exposure in the Miami condo market.  The day that the September 2007 post was published, Corus Bank’s stock price closed at $12.50.  Currently, the stock price is hovering around the $1 mark and has dipped as low as 82 cents per share recently.  A few weeks ago, Corus Bank announced that they would be deferring interest payments on their debt and had also applied for funds under the U.S. Treasury’s Troubled Asset Relief Program (TARP).

Corus Bank was successful in having its construction loan for Quantum on the Bay and Marina Blue paid in full in 2008.  I believe they also had equal success with Continuum North Tower.  How will Corus Bank fare in future months, however, with the condo developments that either recently began closings or have yet to begin?  The following are some of the condo developments in South Florida in which Corus Bank still has an outstanding construction loan along with the original loan amount:

Of the condo developments listed above, Onyx on the Bay is the only one in which Corus Bank has recovered most of its loan amount judging by the closing figures I published in September 2008.   They may be very close to being paid in full on it, if they they haven’t been already.

Closings for condos at Jade Ocean, Paramount Bay and Mint at Riverfront have yet to begin.  I’ve heard that closings for condos at Infinity at Brickell began a few weeks ago.  These four condo developments alone represent slightly over $800M in outstanding loans.  All four condo developments were priced relatively late in the game and could prove to be disastrous for an already troubled Corus Bank.

On top of this, it was announced a little over a week ago that the developer of Tao, a 396-unit condo development in Sunrise, Florida, handed the property over to Corus Bank with work unfinished and closings yet to begin.  The construction loan extended by Corus Bank to the developer of Tao was in the amount of $126,250,000.  Additionally, Corus Bank purchased the mezzanine loan on Tao in the amount of $32.3M, which included principal plus outstanding interest.

It appears that Corus Bank could be wobbling on its last leg.  If it were to go bankrupt, the Miami condo market could see a number of bulk sales occur in 2009.  Even if it were to be granted federal funds from the Troubled Asset Relief Program, how long could that money delay the inevitable?

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52 Comments on "Another Look at Corus Bank"


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Anonymous
Probably too Cynical
7 years 9 months ago

so let’s get this straight: a regional bank which made irresponsible loans and didn’t do enough due dilligence to gauge long-term demand (and is probably way over-exposed to one single market, Miami condos) and when things go tits up they expect the government to give them a hand out?

is it the role of government to prevent financial Darwinism?

Anonymous
Probably too Cynical
7 years 9 months ago

so if they’re $158,750,000 exposed to Tao ($126M senior and the $32M mezzanine) then if they foreclose, can’t they break even if they average just over $400K per unit? is this possible in this building? how big are the units? is it waterfront? can they fire sale 400 units in Sunrise at $400,000 per unit?

Anonymous
Probably too Cynical
7 years 9 months ago

One bank holds the senior on Infinity, Mint, and Ivy? OUCH! this must have been the lender of last resort for some real dogs.

why am I the only one commenting here?

Anonymous
jcrimes
7 years 9 months ago
not so sure Lucas that Corus will take the beatdown you envision. it really depends on how much the equity slice was in every deal (which was usually then financed by a mezz lender instead of being true equity). based on tao, it looks like they did a loan to value of 80% (also when did they buy the mezz for tao? if it was recently, i’m sure they paid a substantial discount for the loan). casting that pct. on the other projects, the equity would have to be worthless for corus to be arguably in a loss position. you’d… Read more »
Anonymous
cb
7 years 9 months ago

So there’s going to be a CVS opening at the base of Everglades on the Bay?

😉

Anonymous
jcrimes
7 years 9 months ago

PTC

i remember two years ago driving by Tao, seeing the sign advertising the prices and then laughing. i mean, who the f%^k in their right mind would ever pay that kind of money, REGARDLESS of how big the unit was, to live in a condo in the damn swamp. it was ridiculous then and it’s even more ridiculous now.

Anonymous
7 years 9 months ago

Lucas,
“Even if it were to be granted federal funds from the Troubled Asset Relief Program, how long could that money delay the inevitable?”
:-)
:-)
:-)
The key is that it is “inevitable.”
Not when.
:-)
:-]]]

wild guess?
2011
Why?
Look what happened to buildings that were under Lehman Brothers’ control.
It is a mess in a building I follow, sales on hold….

Anonymous
Ldk
7 years 9 months ago

Lucas where are prices headed in price per square foot terms by December 2009?

Anonymous
The Ace
7 years 9 months ago

Oh please release me, let me go
For I can’t afford you anymore
To waste my cash would be a sin
Release me and let me buy again

I have found a new Condo
And I will always want it near
Her colors are warm while yours are cold
Oh release me my bank and let me go

Please release me, let me go
For I just won’t pay you anymore
To waste my cash would be a sin
Release me and let me buy again

Let me go, oh release me my bank
Let me go

The Smart Money getting in tune with the straight and narrow.

Anonymous
The Ace
7 years 9 months ago

The Smart Money rarely responds to individual posts but this response is for:

‘Probably too Cynical’ who wrongly stated and we quote “when things go tits up they expect the government to give them a hand out?” referring to the imminent FDIC take over of Corus Bank.

Corus Bank does not expect the Government to give them a “hand out” Corus Bank expects YOU the Tax Payer to give them a hand out. The Smart Money will play no part in this deal as we do not pay taxes.

The Smart Money

Anonymous
7 years 9 months ago

[applause]
:-)
:-)


For Ace (The Smart Money)

Anonymous
7 years 9 months ago

I found your posts on Corus Bank interesting. I don’t Corus will receive any TARP funding; it does not pose a systemic risk like Citigroup. Just like National City, the FDIC will put it into receivership and sell its deposits to another bank. The FDIC will have to liquidate its condo assets at bulk sale rates (as you say).

Anonymous
Generalmagic
7 years 9 months ago

I also have been following Corus Bank. I am VERY suprised they have not filed for bankruptcy. I hope they go under as they were giving loans like it was candy.

Anonymous
7 years 9 months ago
“I found your posts on Corus Bank interesting. I don’t Corus will receive any TARP funding; it does not pose a systemic risk like Citigroup. Just like National City, the FDIC will put it into receivership and sell its deposits to another bank. The FDIC will have to liquidate its condo assets at bulk sale rates (as you say).” – Don’t think so there, big fellow! Just how much money does the FDIC have nowadays? Not a rhetorical question, do you actually knows? Cause last time I checked after IndiMac they were kinda cash strapped. Oh yes, the gov can… Read more »
Anonymous
OMG
7 years 9 months ago

“Two, I’m amazed by just how dead on target my words turned out to be.”

LMAO

Way to pat yourself on the back there. You must have searched long and hard within the archives to find one of your many predictions that actually came to fruition. While I appreciate your efforts on adminstering the site lets not get carried away with your esteemed foresight of today’s market conditions.

Anonymous
Brian
7 years 9 months ago

Corus deserves everything they get. They were one of the only, and probably the biggest, lender around still lending when all the other banks left town. Everyone knew the market here was overbuilt, but Corus plunged ahead.

Their other two big markets to invest heavily in was Las Vegas and Atlanta – two other severely overbuilt condo markets currently in shambles. Genius.

Anonymous
Renter Tom
7 years 9 months ago

I just noticed a development called Marina Grande in North Miami Beach (gotta use Grande with an “e” at the end to sound sophisticated I suppose). Drove past this afternoon….looked like the sales office is dead. Anyone know? Looked like it would be nice…but as a northerner I only am looking at places on the beach….but for a boat lover might now be bad except probably luxury priced and there are sooo many options out there. Anyone know if this Marina Grande is DOA or what? Thanks.

Anonymous
7 years 9 months ago

RT,

Marina Grande was a development by Boca Developers. That was taken over by the lender a long time ago. I think it happened towards the beginning of 2008 if I recall correctly.

Anonymous
SLS
7 years 9 months ago

Quantum, MB, Continuum all sucessful.
It took Oynx 18 months, but they will pay back principle. Corus should also get interest that has not been paid.
Ivy is about 40% closed in 5 months, so Corus should eventually get it’s equity back.
Artecity has sold 37 of 60 Govenor condos, sales slowed to crawl.
Infinity “may” be the one loan Corus is foreclosing in Miami.
Mint is in same complex as Ivy.
Does anyone know if Jade Beach has started closings?

Corus has 202M in loan loss reserves, only around 50M is specific reserves.
Corus has 731M in shareholder equity as of 3rd quarter.

Anonymous
doc T
7 years 9 months ago

Marina Grande came to a dead stop over 1 1/2 years ago. As you can see the cranes and pilings are the only thing remaining of the project. This was a Boca Developer project that failed because of lack of demand and the coming housing crunch. Boca developers is currently involved in several other projects that are either failing or about to fail. I doubt this site will be developed any time soon. It would be nice if someone returns it to its marina state and create new and much needed boat slips.

Anonymous
AJ
7 years 9 months ago

I have always held my ground.
The projects sold and started construction in 2003/2004 and came on line 2007- Early2008 and mostly priced between $300-$450/sf preconstruction will do OK.
The projects sold and started construction in 2005/2006 and coming on line 2008-2009 and mostly priced between $400-$600/sf preconstruction will fall by the wayside.
All flats and all buildings are not made the same. The super six will fall in the later category and will mostly fail. Corus lending to 2 of the super six (Infinity and Paramount) does not bode well.

Anonymous
Renter Tom
7 years 9 months ago
Hey thanks Lucas and doc T. I noticed the cranes and marketing office building there for Marina Grande….from driving by it looked like the place was abandoned although the marketing pictures outside and inside the building looked nice….I also went to their website. Looked nice, but not for me since I need the beach. Amazing how these things just stopped, probably would have been a very nice place but probably overpriced. I liked the east facing double story flooplans. SLS – I’m pretty sure that Jade Beach started closings based on listing for resale and rentals along with the guards… Read more »
Anonymous
Brian
7 years 9 months ago

Continuum North still has about 20% unsold. They did pay off their construction loan, but the developer still has a big chunk of units he’s carrying. They converted many to rentals.

Anonymous
jcrimes
7 years 9 months ago

Brian
how much is a rental at continuum north going for?

Anonymous
Ldk
7 years 9 months ago

A little birdie told me now is the time to buy or forever be priced out of the market!!

Anonymous
Hugo P
7 years 9 months ago
Interesting report from David Rosenberg from Merrill Lynch… Again, this is a NATIONAL analsys, so you have to believe that in submarkets like Miami things have to be even worse. (excerpt from a longer article) Housing market is not close to bottoming out Fifth, we learned that the housing market is nowhere close to bottoming out. New home sales dropped 5.3% in November to a 433k annualized rate – the worst since the 1982 recession. Even though sales are now down 69% from the July 2005 bubble peak of 1.39 million units, we believe builders have not been aggressive enough… Read more »
Anonymous
Hugo P
7 years 9 months ago

Ldk

Keep drinking that Kool Aid… maybe you should go work for RCR

Anonymous
Jane Q. Renter
7 years 9 months ago

Lucas,
Just saw the segment on CBS4 at the gym. Really good segment, some decent insight. The one renter said he rented for 2k/month, but would have to pay 3 times that amount to own. I think that’s a little exaggeration. I see the asking prices for a 1/1 in Marina Blue, what do you think someone can land a 1/1 for? $300/sq ft?

Anonymous
Ldk
7 years 9 months ago

Lucas you called it all bro!

Anonymous
AJ
7 years 9 months ago
Jane Q, I have been following line 8 in MB (my fav) from the beginning. The lowest asking price on line 8 dropped from $600/sf to $450/sf (37th floor). That is quite a drop. Being the super premium line, Line 8 will be an excellent buy for anything less than $450 such as $400. Having observed that, I won’t be surprised to see if the 1/1.5 in MB might be available for $300/sf. Even if the prices do not fall to $300/sf for every 1/1.5 accross the board, you might get one or two distressed flats for that price. If… Read more »
Anonymous
Not a Zilbert fan
7 years 9 months ago

Check out Zilbert’s legendary “Bubbles are for Bathtubs” idiotic statement here…

http://web.archive.org/web/20060208160236/http://www.condoflip.com/

…we will look back at those days and that level of stupidity years from now and laugh.

Anonymous
Wild Bill
7 years 9 months ago

I would only buy the super duper premium line.

Anonymous
Probably too Cynical
7 years 9 months ago

just a question: what is the liklihood of Corus selling off Mint, Ivy, Infinity for pennies on the dollar and these building becoming public-housing? could turn the Brickell area into Detroit pretty quickly, no?

Anonymous
7 years 9 months ago

Condos in Brickell were sold for pennies on the dollar in the 1980s and none of those were turned into public housing. It’s not like the city would alter its plans and relocate all future public housing to Brickell just because they became cheap. I think that’s pretty ridiculous.

Anonymous
Mike K.
7 years 9 months ago

Came across an article that may share relevance to this subject:

http://hosted.ap.org/dynamic/stories/M/MELTDOWN_COMING_SOON?SITE=FLDAY&SECTION=HOME&TEMPLATE=DEFAULT

According to this AP report, commercial real estate is only in the FIRST INNING in terms of their meltdown. Retail sales are slow, tenants are leaving, creating more and more job loss destruction, which will in turn only continue to put downward pressure on home prices. If people don’t have jobs, they can’t get loans. The demand side of this price equation will continue to shrink, as supply continue to grows.

Anonymous
Wild Bill
7 years 9 months ago

If the building fails financially the sate will assign a receiver to run it. When a state appointed receiver runs a building you will start to see how fraudulent a building was being run.
The state appointed receiver couldn’t care less if you maintenance fees are ten thousand a month. Their job is to adhere to state statues that govern condominiums.

CASTLE BEACH CLUB CONDOMINIUM is a good reference of how things will go down, from a maintenance stand point.

Anonymous
900 guy
7 years 9 months ago

Hey lucas, didn’t you say that thinking prices would fall below $400/sf was pretty ridiculous just a few months ago?

Anonymous
7 years 9 months ago

900 guy,

No. Why would I say that when prices had already fallen below $200 per square foot a few months ago?

Anonymous
7 years 9 months ago

I haven’t ben in this forum/blog for a long time but Lucas seems a straight shooter to me.

Anonymous
jcrimes
7 years 9 months ago

Wild Bill
some would say a receiver can run a place pretty fraudulently as well.

Anonymous
Once Again
7 years 9 months ago
I agree in MB the 08 line is the better line. Eveything else that is a 2/2 with the exception of the bgger 2/2 in the highest floors with special floor plans are preety much a joke. They call it a 2/2 but it’s looks and feels more of a 1 with a office/den. It’s a shame the bldg is nice but they overcrammed it with too many units and as a result most of the lines floor plans sux. Views are great but living space practicallity is terrible. Even the 08 it’s nice but still doesnt offer as much… Read more »
Anonymous
Angel
7 years 9 months ago

Those huge columns in Marina Blue in many of the units dont help much either. What a waste of space.

Anonymous
7 years 9 months ago

Corus has a huge amount of cash – that is why they are still around plus they never loaned more than 80% of a project’s cost. They survived the last recession but this one is going to be tougher – they may have done one too many condos – they just foreclosed on a large project in Panama City. It is almost a private bank since the Glickmans own like 40% of the stock.

Anonymous
Woodrow Stool
7 years 9 months ago

Corus Bank just took back the $160M+ Montage project in downtown Reno. It is complete, and the developer walked before a single unit closed.

Anonymous
7 years 9 months ago

Corus could, but does not, post the status of all projects at its website. Tao plus Panama City plus Reno = 3 complete projects now owned by Corus. Their future depends on how much and how fast they can sell these projects.

Anonymous
Homeless family
7 years 9 months ago
While some of you may have some very strong feelings about Tao and whether or not it was a good place to buy, my family and I bought for the right reasons. We wanted the opportunity to live somewhere as nice as the buildings on the beach without the million dollar price tag and away from some of the less favorable elements near downtown. We did our homework, bought way early and have now waited 4 years for our home to be available. All that being said, this whole thing is getting rediculous. Does anybody know what happens next for… Read more »
Anonymous
vania
7 years 8 months ago

i m from brasil i lives sao paulo i m jail mr chairman globo tv mr roberto irineu marinho today but when i go to travel i likes to visited this museun a lot my adress prison rue chucri zaidan 46 morumbi at sao paulo sp

Anonymous
MBer
7 years 8 months ago
Help !! what does this mean for my investment???! Yikes January 5, 2009, 1:56pm EST | Modified: Tuesday, January 6, 2009, 12:00am Bulk buyer snags 60 units at Marina Blue View Larger A Singer Island-based group has paid nearly $13 million for 60 units at the Marina Blue high-rise across from American Airlines Arena inMiami. The deal was recorded in separate deed transactions between developer MistTowers – a subsidiary of Miami-based Hyperion Development – and buyer Welcome Bay on Dec. 24. Joseph Kuharcik, an attorney in Palm Beach County who represented the buyer, declined to comment. Hyperion Development could not… Read more »
Anonymous
Corus Watcher
7 years 8 months ago

Homeless family;

You need a consult with an experienced attorney.

The contract is assignable to Corus and is valid. There may be a loophole but I wouldn’t count on it.

You should watch the following:

Corus’ management of Laketown Wharf in Panama City Beach, FL. See PCBDaily discussions.

Corus’ management recent decisions of a property they are taking over in Reno, NV ~ see The Montage website and related Reno articles via the web.

Any poster on this board that says Corus is dead cannot read a balance sheet or analyze a bank.

Anonymous
7 years 8 months ago

What do you know about the Caribbean? It’s almost finished, started closings several months ago and still very empty.
Beautiful building but prices remain in the impossible range of $900 to $1,200/SF!
Christa and Corus seem to be holding on good.

And the W? Nearing completion, great location and nice building. But it also sold very high, maybe they run it as strait hotel o maybe not. It looks like condo-hotels aren’t doing that bad.

wpDiscuz

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