A group of lenders led by HSBA Holdings PLC and Bank of America Corporation are getting closer to taking ownership of Icon Brickell, a luxury Miami condominium-and-hotel complex that is home to the likes of Jennifer Lopez and husband Marc Anthony.
Miami’s Icon Brickell condominium-and-hotel is inching closer to having a group of lenders led by HSBA Holdings PLC and Bank of America Corporation take ownership of it, according to Jorge Perez, chairman of Related Group, the current owner of the project.
Icon Brickell is a three-tower complex that is located near up-and-coming downtown Miami and features luxuriously chic décor and sculptures by Philippe Starck. Perez is hoping that the new agreement which is reaching its pinnacle will allow Related Group to remain the manager of Icon Brickell. “The negotiations are almost finished,” said Perez.
The Icon Brickell is just one of many new Miami complexes that have had a very tough year. There are hundreds of similar discussions happening throughout the city between real-estate developers and banks that are stuck with more condo developments that anyone knows what to do with. In downtown Miami and neighboring Brickell alone, “more than 22,000 condos have been built in the past four years—more than twice the number added over the previous four decades, according to Holliday Fenoglio Fowler, LP, which advises real-estate developers and investors.”
As a result of this, condo developers have been forced to cut prices as much as 50 percent in the past year to try and encourage buying, however some developments are still not matching the money they need to meet loan payments.
The Icon is not an exception to the pattern seen across Miami by any standards. In fact, Perez has noted that Related Group has invested approximately $1 billion into the Icon Brickell, and the loans that were secured by the three buildings total approximately $700 million.
While representatives of HSBC and Bank of America have thus far declined comment on the talks, Perez said he expects “a friendly agreement” with the lenders, although he wouldn’t comment on whether they would take possession of the buildings through a foreclosure.
Presales of nearly 1,800 units in the Icon Brickell began approximately two years before its completion in 2009, however to date only 117 of the purchases have been completed. According to Ken Smuts, a vice president at Related Group, “a typical two-bedroom unit in the Icon Brickell would cost around $550,000, down 30 percent from the peak.”
What is truly vital for the Icon is that residents are found to pay monthly condo fees, according to Perez who points out that maintenance costs on the three buildings are running at about $12 million a year. Moving forward, instead of selling vacant units in bulk to investors at a large discount, the lenders, for now, have decided to sell them one by one at a higher price.