JACKSONVILLE, FL - When Robin Hurst decided to buy one of the units in Ocean's Edge condominium community just blocks from the beach, she thought it would be a great investment. Less than three years later, she and other condo owners are waiting for an upcoming auction that will determine the fate of the South Jacksonville Beach property.
Fisher Auction Company Inc. will auction 107 out of the 182 units, along with the clubhouse and other amenities as a single sale March 9 for the lender, KeyBank National Association. The single sale, known as a fractured condo sale, is becoming more common across Florida as banks foreclose on condo projects.
The units continued to sell up until late last year, but Hurst, who is a residential real estate agent, said she wasn't surprised the property went back to the bank because many of the prospective buyers backed out of their contracts.
"It's definitely not an ideal situation," Hurst said, but, "auctions aren't four-letter words anymore."
Ohio-based KeyBank took possession of the foreclosed property at 107 25th Ave. on Dec. 16, months after a judge determined the lender was still owed $21.2 million.
Troy Smith, a construction attorney at Rogers Towers PA, said that in many cases, a condo developer gets approved for a loan after preselling a certain percentage of the condos, but after the residential market dropped off, many of those who signed an agreement to buy condos backed out of the deal and the lenders weren't getting paid back fast enough.
"If the market doesn't turn," Smith said, "there will be more [lenders] foreclosing on projects."
The former owner of Ocean's Edge, LeCesse Development Corp., bought the property in October 2004 for $23 million, but borrowed a total of $36 million from KeyBank to convert and renovate the 37-year-old apartment complex into condos.
LeCesse has offices in Altamonte Springs and West Henrietta, N.Y., and owns and operates dozens of condo projects, apartment complexes and senior living facilities in New York, Florida, Minnesota, Virginia, Pennsylvania and Rhode Island.
Among the developer's Florida properties are three other apartment complexes in Jacksonville — the 224-unit Cozumel Apartments, the 84-unit San Jose Villa and the 388-unit The Grand Reserve at Windsor Parke.
Lamar Fisher, the auctioneer and president of Pompano Beach-based Fisher Auction Company Inc., said this sale is the first of its kind that he is aware of in Jacksonville. The trend of selling multiple condos as a single unit is becoming more popular because there is a higher demand for a portfolio that can be leased.
Ocean's Edge is Fisher's second experience auctioning a fractured condo sale. The first was 171 units in Tampa that sold for nearly $22 million in October. He's also preparing six other fractured condo sale auctions around Florida.
The Ocean's Edge units and the clubhouse will be sold as-is with no contingencies to the highest bidder. Bidders must be prequalified and put down an $800,000 deposit to participate. There will be no minimum bid, but the winning bid is subject to the lender's approval.
"The buyer will receive a good deal, for a great product," Fisher said. "It's a great opportunity for someone that will eventually make them a profit."
Byron Moger, executive director for the multifamily division of Cushman & Wakefield of Florida Inc., said the auction is already attracting interest from all over Florida, the nation and even international investors.
He said the sale is unusually attractive because Ocean's Edge was completely gutted and rebuilt in 2006 and is just blocks from the beach.
"It's an extraordinary asset," Moger said. A review of condo sales there from 2008 showed the units selling for between $200,000 and $400,000. Hurst is optimistic that the high quality of the units will ensure that they will continue to be sold.
Source: Jacksonville Business Journal