Miami’s Onyx on the Bay Faces Bank Foreclosures

by Donald Hanz on cities

Biscayne Bay Lofts, the developer of the 28-story,118-unit Onyx on the Bay condominium tower in Miami, Florida is facing bank forclosures action from Corus Bank. Court records showed that Corus has filed foreclosure proceedings against Onyx’s 41 unsold units.

The lawsuit, filed in Miami-Dade Circuit Court, has named Biscayne Bay Lofts and its development partners Luis Ajamil and Willy Bermello of BAP Developers and GGM Developers’ Gustavo Micuslitzki as defendants.

In April, Corus warned that it would foreclose on three projects in South Florida. Onyx is the first to receive the axe.

The basis for the Miami bank foreclosures action is the construction mortgage loan taken out by Biscayne Bay Lofts from Corus Bank. In 2007, the loan was modified at about $44.1 million. In August 2007, Onyx landed its first condominium unit sale. It was a brisk start for Onyx but South Florida’s declining economy got in the way and the condominium tower could hardly sell over two thirds of its units.

The declining economy of South Florida also made it difficult for Onyx developer to obtain a mortgage. Only five units of the 77 that were sold since October 2008 were closed. Data released by Condo Vultures Realty LLC showed that there are only 47 rented units in Onyx.

Corus issued a statement last May 1 that its financial condition is in a very bad shape and that there is a great possibility that it would be put into receivership by federal regulators.

Being in receivership means that the Federal Deposit Insurance Corp. has the right to auction Corus’ foreclosed houses and distressed development loans in South Florida.

McCabe Research and Consulting Chief Executive Officer Jack McCabe said that Onyx developer may lose interest to properly maintain and improve the building since it is under foreclosure proceedings. He added that owners of the condominium tower may face homeowners’ association assessments, a turn off to potential renters and buyers.

McCabe pointed out that Onyx units would interest vulture or bulk investors but not renters because of the high cost of homeowner fees and taxes.

However, Condo Vultures Chief Executive Officer Peter Zalewski disputed McCabe’s claim by saying that bulk investors are not interested on Onyx because there is not enough available units that they can managed efficiently. Added to this is the bank foreclosures action against Onxy which by itself, could scare any investor, buyer or renter.