Condos, Multifamily Properties Push up Foreclosures in Miami

by on cities

Failed condo and multifamily projects continue to push up foreclosures in Miami, based on commercial foreclosure filings in Miami-Dade County.

Among the most recent condo and multifamily foreclosures in Miami-Dade County are five multifamily properties owned by Alvasu Incorporated and 93 condo units owned by Rodolfo Blanco.

A total of 62 units at the San Lorenzo condo project in Little Havana will also be auctioned off, but these are not foreclosures. These are new units adversely affected by continued foreclosures in the Miami condo sector and the oversupply of condos in the market.

The 5 multifamily buildings in Miami and in Hialeah were foreclosed upon by First National Bank of South Miami after the developers, Alvasu and West Side Tire Corporation, failed to pay their $2.7 million, which has already ballooned to $3.4 million.

The multifamily loan represented almost 4 percent of the total loans issued by First National and a huge percentage of its $5.3 million nonperforming mortgages. The bank lost a total of $4.7 million last year largely due to noncurrent mortgage loans and real estate foreclosures in Miami.

Meanwhile, the 93 condo units foreclosed upon by FirstBank Puerto Rico are part of the Coral Gate East condo complex in Miami Gardens. They were formerly owned by businessman Rodolfo Blanco, who bought the units in March 2007 for $8.36 million from a condo conversion development firm with help from FirstBank which gave him a $6.62 million condo purchase loan.

In March 2009, the bank foreclosed on the units and repossessed them after Blanco failed to pay the $7.05-million judgment. In March this year, the bank sold the condo units to Mazal Investments 21 for only $2.83 million, a staggering 60-percent discount from the $7.05-million court judgment. Previously, Mazal also purchased the distressed Inland Towers condo project in North Miami.

The failure of Blanco to resell the condo units he purchased after their conversion and their resale by FirstBank at a huge discount indicate the severity of the problems of the condo market in Miami.

The decision by Beta Credit Management to auction off 62 units in its new condo tower San Lorenzo at $50,500 per unit, around 71 percent below the replacement cost, is another sign of difficulties in the Miami condo sector.

The construction of almost 23,000 condo units from 2003 through 2009 in South Florida led to the overbuilding that drove South Florida foreclosures to high levels, including record numbers of condo foreclosures in Miami.