After seeing relatively little leasing activity for most of 2011, the uptown office vacancy rate is set to fall, thanks to Chiquita International Brands.
The banana purveyor's announcement that it would move its corporate headquarters to the NASCAR Plaza from Cincinnati could shave nearly 1 percent off the rate - pushing it to 12 percent from its current 12.8 percent, according to Karnes Research in Charlotte.
Uptown’s office vacancy rate has hovered above 12 percent since the second quarter of 2010, when it was 12.1 percent. In 2007, at the end of the economic boom, when empty space was scarce, rates were around 2 percent, the lowest in the country.
In calculating the impact of Chiquita’s new lease, Karnes managing partner Andrew Jenkins estimated that Chiquita would occupy roughly 125,000 square feet – or the top three floors - of the office tower adjacent to the NASCAR Hall of Fame.
Last year, uptown had 11,000 more square feet become available than was leased.
“We've just had a shuffle of tenants recently and not a lot of new, good, big deals,” Jenkins said. “We haven't had a lot of really strong, brand new tenants coming in taking a big chunk of space in a while.”
Countywide, there is 8.85 million square feet of office space available for lease. When Chiquita moves in, it will lower the county’s office vacancy rate to 17.75 percent from 18 percent, according to Karnes.
Wednesday, November 30, 2011
After seeing relatively little leasing activity for most of 2011, the uptown office vacancy rate is set to fall, thanks to Chiquita International Brands.
Tuesday, November 29, 2011
Highlighting the popularity of multifamily complexes, three Charlotte-area properties were recently sold to investors.
Chicago-based investment firm Westdale Investment Partners LLC purchased Galleria Village Apartments for $18.5 million. The 210-unit complex, located at 1616 Galleria Club Lane in Charlotte, was built in 2005.
"Galleria Village has been extremely well-maintained...," said Mark Isaacson, a principal with Westdale. "...We are extremely satisfied with the condition of the asset."
Dean Smith of ARA in Charlotte represented the seller.
And Atlanta-based Cortland Partners made its first mark in the Charlotte market. The real estate company bought Cameron at Hickory Grove at 5625 Keyway Blvd., and Delta Crossing at 6000 Delta Crossing Lane. Both are garden-style communities. The deals closed in late October.
Cortland Partners paid $7.54 million for the 202-unit Cameron at Hickory Grove. Cortland Partners said the owner had given the property back to its lender in December.
The company paid $7.3 million for the 178-unit Delta Crossing.
When talking about the acquisitions, both real estate companies mentioned the expected shortage of Charlotte-area apartment units in the future.
"With new supply for apartments slowed to a halt, Charlotte has recorded big revenue growth in 2011," Cortland Partners chief acquisition officer Brad Brown said in a statement. "We hope to complete multiple transactions in the Charlotte market in 2012."
Monday, November 28, 2011
Struggling homeowners may find some help at the Save the Dream tour, which rolls into town later this week. They may even be able to talk directly to someone connected with their loan.
The event provides a chance for homeowners to talk with counselors about their budget, submit a proposal for a loan modification and meet face-to-face with a loan servicer.
It is sponsored by the Neighborhood Assistance Corporation of America, or NACA, a private, nonprofit homeowner advocacy group that has held more than 50 similar tours nationwide.
While the pace of foreclosures slowed last year, many experts expect it to pick up as lenders sort through paperwork problems that led to a moratorium on new foreclosure proceedings. That moratorium has since been lifted.
Last month, one in every 563 housing units in the country had a foreclosure filing, according to research firm RealtyTrac. Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were issued on 230,678 homes in October.
In North Carolina, filings were issued on nearly 3,000 homes during the month.
The "Save the Dream" event will be held from 8 a.m. to 8 p.m. Thursday through Monday at the Charlotte Convention Center in uptown.
The service is free. Organizers say homeowners who attended past events have had mortgage payments cut by more than $500 with interest rates reduced to 3 percent or 2 percent. About 55 percent of homeowners who attend the event typically receive a same-day answer on their loan modification, according to NACA. Homeowners should expect to spend the entire day at the convention center.
Attendees need to bring:
- Proof of income, which could include the most recent pay stub, a rental agreement, proof of pension, social security, child support, unemployment or any other form of verifiable income.
- Three months of bank statements, or six months of statements if self employed.
- The most recent tax return.
- A photo ID such as a driver's license, state identification card or residency card.
- Mortgage statements for each loan on the property.
- Declaration page from the homeowner's insurance.
- Annual tax bill showing property taxes.
- A payment coupon or annual statement showing fees for homeowners' or condominium owners' associations.
Representatives from the following servicers are expected to attend: Bank of America, Wells Fargo, Chase, CitiMortgage, IndyMac/One West, GMAC (Ally Bank), Saxon, Seterus, Suntrust, AHMSI, Ocwen and Litton. Representatives from Fannie Mae and Freddie Mac, the nation's largest investors in mortgages, will also be on-site.
For more information, go to www.naca.com
Tuesday, November 22, 2011
Cushman & Wakefield Thalhimer has leased 42,000 square feet of industrial space to American Contractors & Building Supply Company for a new supply yard at 8900 South Blvd. in Charlotte, the company said Tuesday.
ABC Supply Co. is the largest wholesale distributor of roofing in the United States. Warren Snowdon of Cushman & Wakefield Thalhimer handled the lease negotiations on behalf of ABC Supply Co. and Skip Norris represented the building owner, The Norris Family, LP.
The company also leased 19,200 square feet of space in Arrowood Distribution Center at 1301 Westinghouse Blvd. in Charlotte to Office Solutions, Inc. Snowdon handled the lease negotiations for this transaction as well.
And Boyd Watterson Asset Management leased 1,746 square feet in the Harris Building at 13024 Ballantyne Corporate Place. Patrick McCoy, Ralph Oldham and Cristy Nine of Cushman & Wakefield Thalhimer handled these negotiations.
Friday, November 18, 2011
Sticking with tradition, workers and the building's namesakes, James and Martha Woodward, signed the final piece of steel before it was hoisted into place. A cedar tree and an American flag were also placed on top of the white beam.
Wikipedia also says the practice of "topping out" a new building can be traced to the ancient Scandinavian religious practice of placing a tree on the top of a new building to appease the tree-dwelling spirits of their ancestors that had been displaced.
The photographs were taken by the Observer's Diedra Laird.
Trinity Capital Advisors has bought the note on the Steel Yard in Southend.
Trinity Capital Advisors of Charlotte partnered with Urdang Capital Management, a division of Bank of New York Mellon Corp., to buy the property, which includes three buildings totaling 78,539 square feet on 2.78 acres.
Located along South Boulevard and Tremont Avenue, the property includes the historic Tompkins Toolworx building and is home to Sullivan's Steakhouse. The Steel Yard had been struggling and was in default. Earlier this year, the property lost a major tenant, the Mexican restaurant La Paz, because of a landlord dispute.
"We've been tracking this asset and its challenged capitalization for a long time, and this note purchase allowed us to gain control of fundamentally strong real estate at a compelling basis," said Walker Collier, Trinity Capital's managing director. "This project has suffered over the last year due to its capitalization structure, and now we're ready to re-position and stabilize the asset within the marketplace."
The Steel Yard had been in default on its loan but the note has since been prepaid, according to a review of data provided by Bloomberg News.
Trinity Capital Advisors has been on a buying spree. At the beginning of the year, the Charlotte real estate investment company bought the debt and equity interest in NASCAR Plaza in uptown. The 393,000-square-foot office tower had been scheduled to be sold by its lender at foreclosure auction. For that deal, Trinity partnered with Rubenstein Partners, a Philadelphia-based real estate fund manager.
Trinity Capital Advisors has hired sister company Trinity Partners to manage the Steel Yard. Trinity Partners' Rhea Green will handle office leasing and Charles Thrift at Collet & Associates will handle retail leasing.
Urdang Capital Management is the sole real estate investment management subsidiary within The Bank of New York Mellon Corp., and ranks as one of the largest global asset managers with $1.3 trillion in assets under management.
Trinity Capital has acquired and developed a portfolio totaling four million square feet with a total cost of more than $400 million.
Thursday, November 17, 2011
The Bissell folks are preparing for what might feel routine these days - a topping out celebration for their newest building.
The Bissell Cos. has been on an office-building spree in recent years, despite an economy that has stalled commercial projects or pushed fellow developers into bankruptcy protection.
The developer on Friday plans to be finished with the steel framework for the Woodward Building, a 10-story, 275,000-square-foot office building in Ballantyne Corporate park. The Woodward building is named for former UNC Charlotte Chancellor James Woodward and his wife. Bissell plans to finish it by the end of next year.
The development giant that created the SouthPark and Ballantyne communities has gone against the industry grain, adding buildings and boosting the park’s existing or planned space to more than 4.3 million square feet. Earlier this year, the company broke ground on two new 10-story speculative buildings totaling more than half a million square feet.
In September, the Charlotte City Council voted to voted to rezone 520 acres off Ballantyne Commons Parkway so the park can expand. That rezoning helps Bissell with its plans to add 1 million square feet of office space to the area.
Ballantyne Corporate Park has garnered national attention as the country’s largest speculative commercial project, meaning the office space is being built with no guarantee of future tenants. It also was named the 2010 International Office Park of the Year by the trade group Building Owners and Managers Association.
Bissell has announced or built 10 buildings in the past three years, eight of which are speculative.
There hasn't been much speculative building in recent years because lenders don’t want to make loans for such projects, which are seen as risky in today’s market.
Bissell has paid for its new projects using internal capital, the company says.
Bissell president and CEO Ned Curran has talked about how the new buildings will let Bissell attract corporations seeking larger, contiguous space, something that was lacking in the Charlotte market before the recent recession. Companies are also requiring shorter lead times, developers say.
This year, leasing activity at the office park continued to grow and is on track to end the year up more than 10 percent over 2010, the company says.
At least 2.7 million homes nationwide have been lost to foreclosure during the past five years, and more than 3 million more are at serious risk of being lost as well, according to a report released Thursday by the Center for Responsible Lending and Center for Community Capital at UNC Chapel Hill.
"The findings ... suggest that we are not even halfway through the foreclosure crisis, as millions of additional families are still at risk of losing their home," say researchers, who examined race, ethnicity and income of borrowers to see who has lost their home and who is still at risk.
More than 42 million people took out a mortgage loan between 2004 and 2008, the time period analyzed by researchers. As of February of this year, nearly 6.5 percent or borrowers had lost their home to foreclosure.
The homeowners that have been affected the most are white families with middle- and higher-incomes, researchers found. But minority homeowners are more than twice as likely to lose their home as white households, according to the report, "Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures."
Researchers found that one-quarter of Latino and African-American borrowers have lost their homes to foreclosure or are seriously delinquent, compared to just under 12 percent for white borrowers.
The racial difference in foreclosure rates can't be explained by income differences, the researchers say. For example, 10 percent of higher-income African-American borrowers and 15 percent of higher-income Latino borrowers have lost their homes to foreclosure, compared with 4.6 percent of higher-income non-Hispanic white borrowers.
Instead, researchers point to the types of loan a person receives as the reason for the higher foreclosure rates. Minorities were more likely to have loans with adjustable interest rates, high interest rates or prepayment penalties.
Geography also influences the type of borrower more likely to lose a home. In states where home prices rapidly appreciated, such as Arizona, wealthier borrowers were foreclosed on more often. In areas that saw little price appreciation - think Detroit - it is the lower-income families who are fighting to keep their homes.
For more information or to see interactive maps showing foreclosure rate breakdowns by state and metropolitan area, go to www.responsiblelending.org.
In other mortgage-related news released Thursday, 4.43 percent of home loans are in foreclosure, according to new data from the Mortgage Bankers Association.
Of prime adjustable-rate mortgages, 9.05 percent are in foreclosure, compared to 2.56 percent of prime fixed loans. More than 22 percent of subprime adjustable-rate loans are in foreclosure.
The pace of new foreclosures for all loans rose to 1.08 percent in the third quarter from .96 percent in the second quarter, according to the association.
The number of borrowers behind on their home payments, meanwhile, fell to its lowest point in three years. The delinquency rate fell to 7.99 percent during the third quarter from 8.44 percent in the previous quarter. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure
The pace of foreclosures is expected to pick up as lenders work through a backlog of loans. Many banks temporarily halted foreclosure proceedings after problems arose with how they were processing the paperwork. Banks have largely lifted those moratoriums.
Wednesday, November 16, 2011
Those interested in the commercial real estate market will be best served if they have a healthy dose of patience, according to national and local experts who gathered in the ballroom at the Ritz-Carlton uptown Wednesday morning.
Charlotteans also need to accept that the local economy has been hit harder than some may like to admit, one economist said.
“I think we’re still delusional in (thinking) that Charlotte’s Charlotte and we didn’t get hit hard,” said UNC Charlotte economist John Connaughton, who was part of a panel that spoke about local real estate trends. “Well, we got hit hard. And it’s not getting better anytime soon.”
Lackluster job creation and a reluctance among businesses and consumers to spend money is hindering a recovery, meaning commercial real estate faces “a long grind” next year, both nationally and locally, according to the latest forecast by the Urban Land Institute.
Nationally, the market has improved from last year, said Stephen Blank, a senior resident fellow with the institute, who came to Charlotte to speak about the forecast. But Blank attributed to the improvement more to overall market conditions stabilizing versus healthily growing.
Cities poised to fare best next year include large metropolitan areas near major ports. Cities that have large energy and technology hubs are also attracting investors’ attention, according to the institute’s report, Emerging Trends in Real Estate 2012.
Job creation is the No. 1 driver in commercial real estate. As jobs are created, companies need more office space for employees. Workers and their families spend money, boosting demand for retail and manufacturing space. Warehouses are then needed to store goods.
Between December 2007 and February 2009, the nation lost 8.7 million jobs, according to Connaughton. North Carolina lost 325,000 jobs and Charlotte lost about 80,000 jobs.
The country has since created roughly two million jobs, or a quarter of the positions lost. The state and Charlotte, however, have created proportionately fewer positions. The jobs being created are also largely in the professional and business services and health and education sectors, while the jobs that were lost were largely in manufacturing and construction. This “mismatch” hurts economic growth, Connaughton said.
Another panelist, Landon Wyatt, a partner with Childress Klein Properties, said the Carolinas have seen an increase in investor interest in industrial properties. While the market remains spotty at best, “capital is flowing here,” Wyatt said, adding that in the last 45 days, there have been five deals done involving industrial properties.
Monday, November 14, 2011
UNC Charlotte is searching for recruits for its newest program where students can earn a Master of Science in Real Estate degree.
The University of North Carolina Board of Governors approved the new degree last week, and the university started recruiting students today. The program will begin in August.
"In good times and bad, the commercial real estate industry is one of the key drivers of the economy," said Belk College Dean Steven Ott. "There will always be a need for specially trained employees to manage the complexities of real estate finance, development and construction."
The college hopes to recruit an inaugural class of 12 to 15 students, building to an enrollment of 15 to 20 new students per year. Faculty director Dustin Read said in a statement he expects the class to be a mix of part-time and full-time students. Students will take a mix of classes covering subjects such as commercial real estate, law and land use policy, finance and investment, construction management and financial management.
Go here for more information and admissions requirements. http://msrealestate.uncc.edu/
Friday, November 11, 2011
Forsite Development Inc. has sold the Continental Tire headquarters building for $15.1 million.
Forsite Development sold the 74,8440 square-foot office building in Fort Mills to Investors Associated LLP, a private investment group in Wisconsin.
The deal was done as part of a 1031 exchange, where the buyer is able to sell one property and buy another and defer taxes on capital gains.
The building, located along I-77 at 1830 MacMillan Park Dr., is fully leased to Continental Tire of the Americas LLC.
As part of the sale, Forsite agreed to complete a $3 million, 16,150-square-foot expansion for the tire maker. Hendrick Construction is expected to begin construction next week.
Houston Roberts of Forsite Development negotiated the development agreement and lease amendment.
David Britton Burdette of Marcus & Millichap's Atlanta office represented the seller, while Jamie Medress and Mark Ruble of Marcus & Millichap's Phoenix office represented the buyer.
Forsite Development buys corporate surplus industrial facilities throughout the Southeast. Since being founded in 2004, Forsite has bought or developed more than 3.7 million square feet.
Wednesday, November 9, 2011
Charlotte-area home sales jumped year-over-year in October for the fourth straight month but prices are still falling, new data show.
The region's inventory of available distressed homes also dropped significantly. But the statistics don't take into account a reportedly growing amount of "shadow inventory," or foreclosed homes that aren't on the market.
About 1,882 houses, townhouses and condos sold in the Charlotte region last month, up 12.4 percent from October 2010, according to a report released Wednesday from the Charlotte Regional Realtor Association. Closings dropped 4.4 percent from September.
Meanwhile, pending sales - one of the best gauges of current housing activity - rose 14.1 percent in October compared to the year before. Pending contracts are signed contracts that haven't yet closed.
Average sales prices for the month dipped 3.6 percent year-over-year to $194,837. That's down less than one percent from the previous month.
Association President Laurie Knudsen said she was encouraged by the decrease in listing inventory, which suggests the market is working through a glut of available homes. Listings of non-distressed properties fell 10 percent from last year, while the amount of new listings for distressed homes dropped 55 percent.
"They keep talking about shadow inventory," Knudsen said. "But I think part of that shadow inventory has been absorbed in short sales and other sales. We have not suffered as much as the rest of the country. I believe Charlotte is going to remain pretty stable."
Last month, the closely watched S&P/Case-Shiller Home Price Index showed Charlotte was one of the few major markets where home prices in August rose compared to the previous month. Local home prices rose .2 percent from July and fell 3.4 percent from a year earlier.
"People still continue to move here," Knudsen said. "It's still a destination city."
Tuesday, November 8, 2011
The local housing market is in the doldrums, but a report by Matthew Jones of Real Estate Research Group has discovered that some home builders are being aggressive in the Charlotte area.
Not that it means we'll see many new houses sprouting soon.
Still, Jones found that despite weak demand from buyers, tepid home sales and falling sales prices, some home builders are "seeking to aggressively increase" their market share by buying vacant developed lots.
"There's going to be somewhat of a scramble to develop new lots when supply and demand reaches equilibrium," said Jones, a principal with Charlotte-based Forum Realty Capital, which provides real estate investment banking, brokerage, research and advisory services. Real Estate Research Group is part of Forum Realty Capital.
Home builders own or have under option or contract nearly 19,200 lots in the Charlotte area, Jones wrote in his report, which his firm produced with Storey Partners. That's an increase of nearly 16 percent from the 16,500 lots builders said they had a controlling interest in last year, Jones said.
The Charlotte area has roughly 34,000 vacant developed single-family and townhouse lots in the market, according to Metrostudy, a real estate research firm.
Survey respondents also said they plan to acquire 18,215 additional lots during the next three years. Jones surveyed the nation's top 25 home builders earlier this year for his report.
As Jones sees it, demand is getting close to matching supply. To him, that speaks to the long-term health of the Charlotte housing market.
"In theory, all the vacant developed lots in the market could be spoken for in the next three years," Jones said. "If that was to occur, it would make it very difficult for another builder to enter the market without having to develop new lots."
The region became saturated with empty lots when the housing market crumbled and builders stopped building new homes. Developers typically buy land and secure the necessary permitting, zoning and other entitlements and then sell lots to builders. Because the process can take two years, many developers were left with lots when the economy turned south. Many lots were foreclosed on or given back to lenders.
Bill Miley with Metrostudy said there's currently an 88 month supply of vacant lots in the metropolitan area. A normal market might have a 24-month supply.
The current inventory is down from a record high of 45,000 vacant lots in the second quarter of 2009, or a 103 month supply, according to Metrostudy.
Jones said that while lots may be spoken for, that doesn't necessarily mean builders will put homes on them in the near future. Housing starts will likely remain slow until the unemployment rate improves and people are able to afford and get mortgages. The market must also work through a glut of available homes, including foreclosures.
"Large public builders that still have access to the capital markets can take advantage of opportunistic buys," Jones said.
Currently, the area has about 4,600 single-family and townhome starts a year, according to Metrostudy.
When they do construct new homes, builders plan on making them smaller and cheaper than in the past, Jones' research shows. Most builders plan on selling homes priced between $150,000 and $249,999.
Monday, November 7, 2011
For the second month in a row, home prices across the country fell, according to the latest report by CoreLogic, a real estate research firm.
Home prices dropped 1.1 percent in September compared to August, and 4.1 percent compared to the same time last year.
"Even with low interest rates, demand for houses remains muted," said Mark Fleming, chief economist for CoreLogic. "Home sales are down in September and the inventory of homes for sale remains elevated."
Fleming said he expects prices to continue falling through winter.
In the Charlotte area, home prices fell 1.8 percent in September compared to September 2010. In August, prices dropped 3.1 percent compared to the same time last year.
Despite the low interest rates, the housing market remains saturated with a glut of unsold homes. More foreclosures are also expected to hit the market as banks and lenders work through a growing inventory of foreclosures.
The parts of the country that saw the biggest appreciation in September include West Virginia (up 7 percent year over year); South Dakota (up 3.6 percent year over year); and Maine (up 3.5 percent year over year).
States with the greatest depreciation include: Nevada (down 12.4 percent between September 2011 and September 2010); Illinois (down 9.2 percent year over year); and Arizona (down 9 percent year over year).
CoreLogic tracks repeat sales of the same house over time.
To see the report, go to: http://cl.internal.cvic.com/corelogic/url.php?cin=1x2e1x2a1w1w
Friday, November 4, 2011
A report released this week by research firm Costar Group highlights a growing trend that local real estate companies are already tapping.
Apartment complexes have attracted a lot of attention lately thanks to promising demographics and available financing. While financing for office and retail buildings has largely dried up, Fannie Mae and Freddie Mac are still loaning money to investors and developers interested in multifamily buildings.
Titled "The Coming Rental House Wave," Costar's report talks about how the apartment market has become one of the real estate industry's - and the overall economy's - "best hopes for a return for the good old days, with robust property values attracting keen investor interest."
And Costar senior real estate economist Erica Champion applauds those interested in the Tar Heel state.
"Investors and developers that have been in love with North Carolina and Oregon can congratulate themselves for jumping on the right bandwagon," she wrote in the report.
Nationally, renters now make up more than 40 million households - or one-third of U.S. households, according to Costar and Freddie Mac.
During recent boom times, U.S. home ownership hit 69 percent. That's since fallen to 66 percent. Each 1 percent drop equates to one million new renters entering the market.
Locally, developers and investors have been active.
Last year, two new Charlotte apartment properties sold for premiums.
And a growing number of developers have found new footing developing, buying or managing multifamily properties.
Northwood Ravin LLC, for example, was formed last month by Ravin Partners and Northwood Investors to focus on multifamily properties in the Southeast. Ravin Partners was created by David Ravin, former multifamily president at Crosland, who bought Crosland's residential development and construction department earlier this year.
Northwood Ravin, which has 95 employees, is building a 200-unit complex in Richmond, Va., a 134-unit project in Raleigh and a 345-unit complex in Atlanta.
And in September, Charlotte-based developer Pappas Properties announced its plans to build multifamily housing in new markets in the Southeast.
Ferncroft Capital of Charlotte, in a joint venture with Crow Holdings of Dallas, has bought Northlake Commons Shopping Center for $22 million in an all-cash deal, the companies announced Friday.
"...Rarely have we seen such a quality investment opportunity that has this much upside," said John Hollmeyer, a principal at Ferncroft.
The shopping center sits adjacent to Northlake Mall in north Charlotte. The center was built in 2006 by Charlotte-based Faison.
Ferncroft's strategy is to lease up the remaining shop space at 10 percent to 20 percent below market rent, the company said in a release.
New South Properties will be handling leasing and management.
Ferncroft has acquired 726,000 square feet of income-producing property totaling $87 million during the past four years. The firm targets retail, office and industrial properties throughout the Southeast ranging from $10 million to $100 million.
Recent purchases include the Park Avenue building in South End.
Thursday, November 3, 2011
A federal judge has ruled that a couple who tried to get out of their contract to buy a condo at the Vue should get their $145,485 deposit back.
The ruling against the uptown luxury high-rise could also dampen future condo development - particularly for large projects, some say.
Lawrence and Ke Ding Berkovich sued the developer of the Vue residential high-rise in uptown in December saying they should be let out of their agreement to buy a $1.28 million condo.
The Charlotte couple had entered into a purchase agreement on Dec. 10, 2008 to buy unit 5102 of the 51-story high-rise at Fifth and Pine streets, the filings say.
The couple canceled the contract less than two years later on Oct. 18, 2010, according to court documents. The couple claims there were various paperwork problems, including the developer's failure to include a recordable legal description of the property. They also sued for unfair trade practice and misrepresentation.
Last month, U.S. Chief District Judge Robert Conrad, Jr. ruled that a proper description of the property had not been provided with the sales contract as required by the Interstate Land Sales Full Disclosure Act. The buyers, therefore, were entitled to cancel the agreement within two years and get their earnest money back, the ruling says. The judge did not rule on the unfair trade practice or misrepresentation claims.
"This could affect other buyers," said the plaintiff's attorney, Celie Richardson of the Richardson Law Group. She declined further comment.
Vue developer Dan McLean said in a statement: "The Vue disagrees with the ruling and we plan to appeal the Court’s decision.”
Between the time the luxury condo tower was announced in 2005 and when it was finished in fall 2010, the economy has blossomed and then burst, uptown condo projects have sprouted and then fell out of favor, and buyers have gone scarce - either unable or unwilling to commit money toward a new home purchase. Some buyers say appraisals are coming in below contracted sales prices, making it difficult to get financing.
The Vue has said roughly 60 percent of the 409-unit building was pre-sold. Since the tower opened, fewer than two dozen buyers have closed. Others want to get out of their deals but are afraid of being sued by the developer. The Vue's condos started selling for just under $200,000 to more than $2 million. Buyers paid 10 percent of the contracted sales price as a deposit.
The Vue countersued the Berkoviches, asking the court to compel the buyer to complete the purchase. Conrad also ruled last month that because the contract was legally terminated, the Vue's counterclaim was moot.
The ruling may have broader implications, attorneys say.
In North Carolina, a condominium doesn't legally exist until the developer files a declaration under the N.C. Condominium Act. The act, however, doesn't permit the declaration to be recorded until construction of the building containing the condo has been completed.
Many developers pre-sell units before construction starts, as was the case with the Vue.
The Vue had argued that it did not deserve to be "penalized" for its failure to include a recordable legal description in the parties' contract of sale. The judge agreed it didn't deserve to be penalized, "especially when it appears that North Carolina law makes such a thing impossible," according to the filings.
Developers can sell condos without a recordable legal description, the judge wrote in his ruling.
But the Interstate Land Sales Full Disclosure Act "provided purchasers with a right to revoke the contract for two years to guard against possible fraud," he wrote. "...Plaintiffs are entitled to the prophylactic measure Congress granted purchasers deprived of a recordable legal description."
Attorney Bob Turner with Horack Talley said the ruling, if upheld, could change future condo development. Turner was not involved with the Berkovich case.
Turner said "the clear implication" of the ruling is that "the developer (and the developer's lender) must be confident that the entire project can easily be completed within two years from the date the first contract is signed."
Because lenders often require a significant number of pre-sales before construction can start, he said, this could essentially shorten the time a developer has to finish a new project.
"As it stands now," Turner said, "large condominium projects may become a thing of the past in North Carolina."
Wednesday, November 2, 2011
The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities rose last month - hitting its second-highest level in recorded history, according to Trepp, a real estate research firm.
In October, 9.77 percent of CMBS loans were delinquent 30 days or more or in foreclosure, up from 8.58 percent a year ago, Trepp says.
Charlotte-area delinquency rates are due to be released Thursday.
Commercial mortgage-backed securities are pools of real estate loans that have been packaged together and sold to investors. Packaged loans account for 20 percent of the nation's commercial real estate loans.
Industrial properties saw the biggest increase in delinquencies, which rose to 11.59 percent from 6.27 percent during the past year. Office property delinquency rates jumped to 8.95 percent from 6.68 percent a year ago. Multifamily property delinquency rates rose to 16.73 percent from 14.63 percent; delinquencies for retail properties inched up to 7.61 percent from 7.17 percent; and the delinquency rate for hotel properties fell to 14.12 percent from 14.92 percent last year.
For more details, go to http://www.trepp.com