Related

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The lenders and the project’ss developers, CityPlace South Tower, LLC, an affiliate of The Relatedc Group, reached an agreement in whicg the new partnership will acquire titl e to all unsold units inthe project. Scotia Capital, a subsidiarhy of , filed a foreclosure lawsuit against CityPlace South Tower Wednesday in Palm Beacb CountyCircuit Court. The complaint was based on the $134.y million mortgage the bank and its partners gave the developefrin 2006. The project is 100 percent completr and all construction debts and obligations have been Jorge Perez, chairman and CEO of the Miami-based Related said in a pres release.
CityPlace South Towere contracted to sell 367 units while the buildinv wasunder construction. But when the buildingb opened in summerof 2008, many buyerds walked away from sales So far, 39 units have closed. Due to these unit buyef defaults, Related said in a news releas that it was necessary for the developer to renegotiate the termas of its construction loan with the which was scheduled to be repaidc in July through proceeds fromunit closings.
Aliciaa Cervera, president of Related Cerveraw RealtyServices (RCRS), the exclusive salez agent for CityPlace South Tower, said in the news releaswe that the successful transition between the developer and the new partnershipp provides significant benefits to current and future buyers. “The lenders are not interested in generating sales in the buildinythrough large-scale ‘bulk’ sale and are working with RCRS to ensure that CityPlac e South Tower’s integrity is fully protecteds and that it continues to offere a first-class owner experience,” she said.
Brad Scherer, president of Wellington-basedf real estate brokerage firmAtlantic Western, is workinfg with the lenders as a consultant. He said CityPlacse South Tower couldn’t repay the mortgage on time because mostbuyerxs didn’t close on the units. Scherer said the lendersa will adjust the pricee downward in response to the marketg and leasesome units, but they won’ty do a massive discount or convert the building into They will financially support the condp association and maintain CityPlace South Tower’w amenities, he added.
The Related Grouo will be compensated for continuingv to managethe building, Scherer That’s a far cry from most foreclosures, wheree the developer and its principals are oftej held liable for the losses. “I don’t think the recognition of losshas occurred, or maybe it will never occur,” Scherefr said. “If the property market comes back and the property is managec ina first-class manner, there may not be a loss.” Accordingt to court documents, the partners in the $134.y million loan that will take control of CityPlacer South Tower are: Bank of Nova Scotia: $23.
7M Cherisbh Thompson, the Miami-based attorney who represents Bank of Nova Scotia in the didn’t immediately return a call seeking comment.