ST Residential an opportunity fund that controls several South Florida condo projects as part of a nationwide distressed loan portfolio is on track to pass its first test of a FDIC-guaranteed note package with a $150 million payment scheduled to be paid Tuesday.
Based on 1,400 new condo sales for nearly $650 million in South Florida alone through Sept. 30, the Chicago-based investment fund appears poised to meet every requirement of a three-step loan repayment schedule that was negotiated at a time when U.S. financial system appeared on the brink of a meltdown.
Some two years ago this month, ST Residential outbid seven other possible suitors, including Miamis Crescent Heights and reportedly the Related Cos. for the right to pay the Federal Deposit Insurance Corp which guarantees individual bank accounts more than $550 million for a 40 percent managing equity stake in a real estate loan and asset portfolio with an outstanding balance of $4.5 billion priced at 60 percent of the book value at the time of the deal from the failed Corus Bank of Chicago.
Created specifically for the Corus Bank portfolio initiative, ST Residential is comprised of institutional heavyweights including the Starwood Capital Group, Perry Capital, TPG Capital, and WLR LeFrak.
Prior to its failure in September 2009, Corus Bank was one of the most active condo construction financiers in the country and a major funding source for South Floridas vertical boom.
Under the terms of the private, public deal reached in October 2009, the FDIC, as receiver, has partnered with ST Residential in an effort to stabilize, manage and sell off the Corus Bank loan portfolio in one of the largest structured transaction sales since the U.S. financial meltdown in 2008.
As the winning bidder, ST Residential gained managing control of a 102-property portfolio with a combined 23 million square feet of space in various markets, including South Florida, Los Angeles, New York and Phoenix.
More than three quarters of the properties in the Corus Bank portfolio at the time of the FDIC deal were condo projects with a combined 12,000 units and 15 million square feet of space, according to the ST Residential website.
In South Florida, ST Residential obtained outright control or a stake in syndicated loans for several condo projects, including Artecity in Miami Beach; Infinity at Brickell, Mint and Paramount Bay in Greater Downtown Miami; Jade Ocean in Sunny Isles Beach; and Artech Residences in Aventura.
Given the size of the Corus Bank portfolio and the extreme conditions plaguing the real estate market in 2009, the FDIC issued $1.38 billion in notes to create a financial cushion for ST Residential to execute the workout plan with patience.
Under the terms of the deal, a second payment for $850 million is scheduled to be paid in October 2012, and a final payment of $377 million in October 2013, according to the FDIC.
ST Residential spokesman Peter Marino said and the FDIC confirms that the opportunity fund has already satisfied its obligation under the terms of the note package.
Sufficient funds to pay all of the notes in full when due have accumulated in the defeasance account, said Andrew Gray, an FDIC spokesman. Therefore, the note that is due next week as well as the other notes will be paid when due without the need to call for the FDIC guarantee.
