Era of Bulk Condo Sales May Be Over in Miami

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The days when institutional buyers could swoop into Miami and gobble up hundreds of distressed condo units in one deal may be over.

"Bulk deals in Greater Downtown Miami are just about as extinct as the residential construction crane," said Condo Vultures principal Peter Zalewski in a recent report.

According to the Bal Harbour-based consultancy, the last large scale deal was the transfer of 672 condo units in a project called Everglades on the Bay, which was essentially approved by a court on Oct. 27. Only 177 of the 849 units in the development were sold.

New York-based Rosewood Capital, led by Edmond A. Kavounas, paid $142 million to assume control of the development from Cabi Downtown LLC, Zalewski reports.

"With nearly 700 unsold units, the Everglades on the Bay was the last of the mega-condo projects standing vacant in Greater Downtown Miami with no clear future," Zalewski writes. "In the last two years, lenders and bulk buyers have successfully infused a significant amount of capital into nearly all of the other large-scale distressed condo projects, resulting in a backstop of the price declines in Greater Downtown Miami."

In recent years private equity groups and institutional investors have already completed more than 20 transactions in Greater Downtown Miami for more than 1,600 units and three million square feet of saleable at a combined price of more than $650 million, according to Condo Vultures data. But almost all the large block of units in developer-controlled projects have been absorbed in the last two years.

"The bulk strategy for buyers going forward is likely to be either focusing on smaller blocks of 10 to 20 new units in Greater Downtown Miami or shifting north or west into other South Florida central business districts or suburbs with an objective of picking off some of the failed condo conversions that are still standing vacant right now," Zalewski predicts.

 

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