As the year starts winding down, Miami real estate investors have begun buying large blocks of Miami condos, known as ``bulk deals'' at a rapid speed.
According to analysts, the burst of new activity indicates investors, mostly seasoned Miami real estate professionals, recognize the new construction market is nearing bottom.
Investors have closed on five bulk transactions totaling 518 units and 710,500 square feet throughout Miami-Dade County, since the end of October.
For four of the five deals the combined purchase price was $43 million.
A fifth deal, a project of Terra Group, involved the purchase of the reduced construction note balance of $120.5 million that was secured by 244 unsold units at 900 Biscayne Bay. The price for the note, which included $28 million in capitalized interest, was not disclosed.
Attractive prices seem to have stimulated investors' interest.
Craig Studnicky, president of Aventura-based International Sales Group,``If we're not at the bottom, we're close enough and they are coming in and buying asset for 30 to 50% less than replacement cost.''
Peter Zalewski, a principal with Condo Vultures, said the recent quick sales were also the result of prices on inventory and delinquent notes by lenders. ``Lenders feel that in the second half of 2010 commercial real estate is going to plummet, so this is a house-cleaning measure to shore up balance sheets in anticipation and preparation for the real drama that comes next year,'' Zalewski said.
Analysts predict Miami commercial real estate values will suffer, as businesses close, tenants fall behind on rents, and commercial borrowers default in greater numbers, as the job outlook remains grim for the near future.
One attorney who specializes in Miami commercial real estate, said the new deals can also be credited to the growing frequency of ``package deals,'' in which lenders offer the title to a property as well as the delinquent note.
Package deals allow new buyers to avoid the cost and delays that come with having to file a foreclosure against a borrower who may also decide to file for bankruptcy. ``With package deals, the litigation goes away and the new buyer has a project without any threat,'' Steinman said.
Contributed by MLR Realty
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