This article was published February 18, 2008 in the Miami Herald.
It is reproduced here as an update on this project.
Fort Lauderdale condo developer files bankruptcy
BY PATRICK DANNER
The developer of Fort Lauderdale’s Strada 315 condo sold about 40 percent of the 117 units in the two months since completing construction, but it wasn’t enough to keep the builder out of bankruptcy.
Strada 315 LLC of Delray Beach filed for Chapter 11 last week after it couldn’t persuade Regions Bank to extend a $34.8 million construction loan on the project at 315 NE Fourth St. in Flagler Village. The builder is affiliated with Delray Beach’s Southpoint Realty Development.
Regions also put holds on any money the developer made on unit sales above the loan payments it owed, Strada says in court documents. As a result, “Strada 315 has found it almost impossible to operate its business and focus on closing more sales.”
Jack McCabe a Deerfield Beach real estate analyst, said Regions’ stance with Strada signals lenders are becoming more aggressive in collecting debts from developers.
Strada has sales contracts on 51 of the remaining 69 units, but the developer admits it expects ”a large number” will not close and buyers will forfeit deposits because of the current economic conditions. Nevertheless, it adds it expects to close “a significant number of units in the next two months.”
Regions apparently isn’t as optimistic, McCabe said.
”There’s good reason for that. We’re seeing such a high percentage of walkaways,” said McCabe, who is advising private equity groups and wealthy investors on buying opportunities in distressed properties.
Strada manager Thomas D. Laudani, its bankruptcy lawyer, Thomas Messana, and Regions’ Tim Deighton couldn’t be reached Monday.
Strada 315 was among two dozen residential projects proposed for Fort Lauderdale’s Flagler Village in recent years, but was one of only a handful to proceed.
Some developers either delayed or canceled projects, in some cases because of the softening real estate market, stingier lenders, higher building costs, or a combination. That has stalled what many observers had hoped would be a renaissance for the area.
The 21-story Strada 315 features one- and two-bedroom units. Sales prices thus far have ranged from about $228,000 to $606,000, property records show.
Strada has repaid $16 million to Regions, the developer says in court papers. But Regions’ decision to keep the ”excess proceeds” from units sales, Strada says, means the developer can’t pay subcontractors and creditors. Liens totaling more than $600,000 have been filed in recent weeks, though Strada disputes some amounts.
Regions last month blamed slowing real estate markets in Florida and Georgia for quadrupling its reserve for loan losses to $360 million.
The bank is ”acting quickly to address current areas of weakness,” said Dowd Ritter, chief executive of the Birmingham, Ala., bank, in a Jan. 3 statement.
Strada’s bankruptcy filing didn’t provide specific information on its assets and liabilities. It just checked boxes indicating they were between $10 million and $50 million each.
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