Prime Properties Have Investors Interested and Circling if Lender Fails
(Source: Wall Street Journal)
Corus Bankshares Inc.’s recent warning that it could be placed into receivership by federal regulators has set off a scramble among real-estate investors who hope to pick up the lender’s nonperforming loans.
The Chicago-based firm, which became one of the leading lenders to high-end condominium towers from Miami to Los Angeles, faces a mid-June deadline to sell itself or raise at least $390 million in capital. If Corus, which had $7.7 billion in assets as of March 31, can’t survive, it would rank as the largest bank failure this year by assets and the fourth largest of the current downturn.
While it is possible that Corus will find the capital it needs or a buyer, many analysts believe the deck is stacked against the bank because its problems are so complex. “Just given the environment that we’re in and given the condition of their balance sheets, those tasks would prove to be rather difficult,” said Daniel Cardenas, senior vice president at Chicago brokerage Howe Barnes Hoefer & Arnett Inc.
While many lenders are being hurt by the condo crash, Corus is particularly vulnerable. Condo-construction loans accounted for nearly 75% of the lender’s commercial real-estate loans. Some 41 of the bank’s 85 condo-construction loans were in default at the end of 2008, and an additional 23 condo loans were considered “potential problem loans” at risk of default. In Florida, all but three of 20 condo loans were in nonaccrual, the company said last month.
Read Nick Timiraos full article “Corus Has Buyers for Its Condos: Vultures” in the Wall Street Journal (May 13, 2009)