Two foreign insurance companies that control some of the debt on the Vue luxury condominium tower in uptown are trying to sell the project's troubled loan to investors interested in changing the condos into apartments, an industry publication is reporting.
The insurance companies control $130 million of the tower's $195 million balance on its construction loan, according to the March 7 issue of Real Estate Alert. The developer, MCL Cos. of Chicago, defaulted on the loan in February 2011, the alert says. A buyer would also have to pay off the loan's remaining $58 million portion, held by Goldman Sachs.
The $275 million Vue at Fifth and Pine streets overcame fierce challenges when it became the only new luxury condo tower to survive the recession.
As sales agents struggled to sell condo units in the weak housing market, developer Dan McLean repeatedly said he would never turn the tower into rental units. In an October 2009 interview, McLean told the Observer there was "no way" the Vue condo tower would convert to apartments, as other unsuccessful condo projects had done.
McLean personally guaranteed the Vue's construction loan when it was restructured in late 2009, Real Estate Alert reported. The loan maturity was extended to late 2012, "but the cashflow woes worsened, as new sales dried up and some early buyers successfully sued to be let out of their purchase agreements," the report says.
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 fallen out of favor, and buyers have gone scarce - either unable or unwilling to commit money toward a new home purchase. Some buyers have said appraisals came in below contracted sales prices, making it difficult to get financing.
McLean refused to lower the sales price and said he was betting on buyers looking for second homes.
The Vue has said roughly 60 percent of the 409-unit building was presold. But relatively few of those units have closed. The Vue's condos started selling from just under $200,000 to more than $2 million. Buyers paid 10 percent of the contracted sales price as a deposit.
But the Vue suffered significant legal blows last year as buyers sued to get out of contracts or recover deposits.
In April, a Mecklenburg County Superior Court judge ruled the developer can keep only a deposit from buyers who signed contracts, but can't force them to close on their units. MCL Cos. had sued at least 10 buyers, claiming they breached their contract to buy units.
And in November, a federal judge ruled that a couple who tried to get out of their contract should get their $145,485 deposit back.
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 said.
Charlotte's apartment market, meanwhile, has been booming as occupancy rates and rents rise. While commercial construction overall remains at a standstill, developers have announced plans for new apartment complexes. Existing projects have sold at a premium.
The 51-story Vue offers studios, one-bedroom units, two-bedroom units and penthouses. It features an Olympic-size pool, tennis court, fitness center, dog-walking area and a wine cellar.
For more information about Real Estate Alert, go to http://www.realert.com
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