Another Look at Corus Bank
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:
- Artecity – $60,300,000
- Caribbean Miami Beach – $124,700,000
- Infinity at Brickell – $140,300,000
- Ivy at Riverfront – $130,400,000
- Jade Ocean – $288,115,000
- Mint at Riverfront – $191,800,000
- Onyx on the Bay – $44,100,000
- Paramount Bay – $216,000,000
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?