Mega-Project The Subject of Various Lawsuits

From the Herald Tribune...

Partners in Proscenium project suing for millions

By KEVIN L. MCQUAID

Published: Wednesday, July 1, 2009 at 1:00 a.m.
Last Modified: Tuesday, June 30, 2009 at 7:38 p.m.

SARASOTA - Two former partners in the Proscenium are suing developer Zeb Portanova for defaulting on a deal to pay them nearly $5 million -- the largest unpaid debt to date tied to the stalled downtown real estate project.

With the default -- compounded by promised financing that Portanova and representatives now acknowledge may never occur -- husband and wife Gary Moyer and Karen Cook contend Portanova also owes them an additional $11 million. That money is supposed to be paid in monthly installments beginning in December.

"We expect him to pay us," Moyer said Tuesday. "It's not an if, an and or a maybe. He's put us in a position where we now are unable to adhere to commitments we've made."

Moyer and Cook, partners in Lion's Gate Development Group Inc., face a pair of foreclosure lawsuits totaling $1.27 million, for unpaid loans on their Lakewood Ranch Country Club home and on a commercial space at the San Marco Plaza, in Lakewood Ranch, which Lion's Gate developed.

The pair's lawsuit, filed Monday in Sarasota County circuit court, marks the latest legal action swirling around Portanova and Proscenium, a nearly $1 billion, Waldorf-Astoria-anchored real estate development that has stalled amid a lack of financing.

In April, Cadence Bank N.A. filed a $3 million foreclosure suit against Portanova and the Proscenium, and a security company is seeking roughly $35,000 for lack of payment.

The lawsuit by Moyer and Cook also represents the largest in a series of mounting bills that Portanova has failed to pay and might be personally liable for.

More than a dozen contractors, real estate consultants, attorneys and other professionals are owed an estimated $3 million related to the Proscenium, designed as an 18-story tower with offices, retail and restaurants and an 800-seat theater.

Neither Portanova nor his attorney, William Schlotthauer at Sarasota's Williams Parker law firm, returned calls or e-mails for comment.

Despite the legal woes, Portanova continues to try and line up financing with a pair of Atlanta partners -- Nancy Edwards and Kim King -- whose lack of real estate finance experience and embellished pasts were highlighted in a Herald-Tribune story in May.

At the time, Portanova maintained that both Edwards and King were credible financiers capable of generating the money needed to acquire land for Proscenium.

Portanova provided King and her Greencastle Asset Management with $1 million last year, in exchange for securing $100 million in financing, court documents show.

But with no financing in place despite numerous promises, Portanova travelled to Atlanta earlier this month to meet with King.

"Ms. King is still optimistic that funding will occur but provided no specific date," Schlotthauer wrote to Moyer's attorney last week. "We have repeatedly heard this story from Ms. King so we do not have much confidence at this point. The partners are currently reviewing their options as it relates to the Funding Agreement with" Greencastle.

Schlotthauer said Portanova is now seeking other financing sources as well.

Portanova, meanwhile, also continues to negotiate with Anglo-Irish Bank to acquire the former Sarasota Quay property at 401 N. Tamiami Trail.

Sources with knowledge of the deal said Portanova faces a Sept. 1 deadline to complete the estimated $40 million transaction to buy the 15-acre site.

Moyer and Cook's lawsuit could impinge on those plans, though. Anglo-Irish officials have declined comment on the negotiations.

At the heart of Moyer and Cook's lawsuit is a November 2008 agreement in which Portanova bought out Moyer's 45.5 percent interest in the Proscenium, which Moyer had conceived four years earlier.

The agreement calls for Portanova to pay the pair $4.92 million by March 30 of this year.

Only $80,000 of the amount has been paid, the lawsuit states.

Additionally, the agreement states the Proscenium would pay Moyer $32 million from project income "before distribution of any profits to the members of the Proscenium Development or their affiliates."

Since its signing, the agreement has remained unfulfilled and been extended twice, most recently on May 30, court records show.

Moyer is owed more than $10 million on July 22, the documents state.

"We've put three years of our life into this, it's like a child we've given birth to," Moyer said of the Proscenium. "All the progress that was made, and the tenants arranged, to see that go by the wayside is so disheartening."

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South Florida Condo Developer Tarragon Files Chapter 11 Bankruptcy

The latest domino to fall. Tarragon was apparently caught up in the current perfect storm of bad timing, falling sales, lack of available credit and a sharp drop off in the housing sector.

Tarragon Corp. is the latest homebuilder to be hit by the housing crisis.

The company and 19 of its subsidiaries filed for Chapter 11 bankruptcy reorganization in New Jersey federal court on Monday.

Tarragon has developed four condominium projects in Jacksonville that include Bishop’s Court at Windsor Parke, Cobblestone at Eagle Harbor, Mirabella and Montreux at Deerwood Lake, none of which are sold out, according to the company’s Web site. Tarragon also owns four apartment communities, including Club at Danforth, River City Landing, Vintage at Plantation Bay and Woodcreek at Regency.

The estimated number of creditors is between 5,001 and 10,000. Assets have been estimated at about $841 million and liabilities at about $1.035 billion, court records show.

The three largest unsecured creditors are listed as New York-based Taberna Capital Management ($125.9 million), New Jersey-based AJD Construction Co. ($2.9 million) and Fort Lauderdale-based Omni Boys North Ltd. ($1.03 million).

Tarragon CEO William S. Friedman did not return a phone call for comment.

The firm has been an active developer of multifamily housing for rent and sale in Florida, Texas, Tennessee and the Northeast.

The bad news for Tarragon stockholders: The company said it does not expect there will be any distribution to equity holders in conjunction with the bankruptcy cases. Shares (NASDAQ: TARR) dropped from a dime to a nickel on the news.

The filing shouldn’t come as a surprise to anyone who has followed the recent fortunes of the firm, which included steady losses – more than $105 million for the first nine months of the year – bargain sales of assets, shareholders suits, deposit forfeiture on land deals, compliance trouble with NASDAQ, margin calls on the stock of the chairman and his wife, and the company’s inability to secure long-term financing.

Tarragon said it had a commitment for debtor-in-possession financing from an affiliate of ARKO Holdings, an Israeli public company, and said the bankruptcy filing shouldn’t have any day-to-day effect on Tarragon’s property management subsidiary, or on the operation of its rental apartment properties.

Friedman said in a release that, based on discussions with unsecured note holders and the support of ARKO, he expects to structure a consensual plan with the creditors to preserve the value of its property management and development platforms, and maximize any return to creditors.

The Tarragon board is being advised by Lazard, and Friedman said in the company news release that the board did not rule out additional asset sales and “all available alternatives.”

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Miami Commercial Market to Come Unglued

Miami commercial has dodged the bullets...until now. Be aware this isn't just the press looking for blood, even seasoned commercial brokers are predicting a meltdown. Read on.

Real estate market in Miami finally succumbing to economy

By J.W. ELPHINSTONE
THE ASSOCIATED PRESS

Published: Sunday, January 11, 2009 at 1:00 a.m.
Last Modified: Saturday, January 10, 2009 at 11:55 p.m.

MIAMI - Despite record foreclosures, despite double-digit home price declines, and despite scary job losses, Miami's commercial real estate market has rolled with the punches -- until now.

"We're in a better place than where people thought we would be because of the collapse in the residential market," said Stephen Nostrand, an executive vice president at Colliers Abood Wood Fay. "It's true, it's horrible, but it could be a lot worse.

The fear now is that it soon will be.

Industry watchers expect the national recession, new supply of offices and shopping centers and a crippled housing market to finally hit the city's property rents and vacancies this year.

Retail shops will suffer the most. Even though the retail vacancy rate in the greater South Florida area hovered around 5 percent, which is lower than the national average of about 7.5 percent, it is expected to climb steadily this year.

The few retailers entering the market like Kohl's and Ikea will be offset by many other small and mid-size stores closing shop. Job losses this year in Miami are expected to total 15,300, according to CBRE Torto Wheaton Research. That will curb consumer spending, while the national recession will hurt tourism.

"Anecdotally, every week there are more leasing signs up and more dark store fronts," said Nostrand.

Last month, Whole Foods pulled out of its commitment at Met 2, a retail, office and a hotel complex in downtown Miami. The grocer would have been the first supermarket downtown.

"That's huge. Definitely trauma and sign of the times," said Jonathan Kingsley, managing director of Grubb & Ellis Co.'s South Florida office.

Met 2 is one of three new office projects under construction in downtown, and they are a source of concern for many office landlords. Together with the Brickell Financial Center and 1450 Brickell, the trio will add about 2 million square feet of space to the downtown market. That's about 20 percent of the total current market.

And only 10 percent of that office space has been leased, said Scott Strickland, senior vice president at Jones Lang LaSalle. If more of that space is not leased before the projects are completed it could drive the vacancy rate for top-quality downtown offices to 15 percent from 8.6 percent, he estimates.

"Even in a good market, you would be cautious of putting up that much inventory at one time," Kingsley said.

Although the three buildings are not set to be completed until 2010, tenants already are smelling the blood in the water. With years left on their leases, tenants are going in early for renewal talks to wring the best deals out of their landlords. Others are waiting until the last day to take advantage of renewal options to make landlords sweat. Tenants are getting a month's free rent, building improvements and lower rental rates.

Some are negotiating so-called "out clauses" into their contracts in case they have to downsize. An out clause allows a tenant to give back a certain amount of space during a set period of time without penalty.

Big time tenants in the market, like Merrill Lynch, Bank of America, Citigroup and Wachovia, might just need an out. They have announced layoffs nationwide that could affect Miami.

"It's a whole new world for landlords negotiating leases with tenants," Nostrand said. "Today, everything is on the table."

In the last two years, rents in the downtown market rose through the $40 per square foot rent threshold for the first time. But Kingsley said rents for top-notch offices will likely fall about 20 to 25 percent in the next two years, mostly because of the excess space from new offices.

The industrial market, meanwhile, should fare better. Rents are expected to slip some in 2009, but not drastically, according to a Grubb & Ellis report. There has been little overbuilding in the sector and vacancy rates, now at about 8 percent, will creep up to about 9 percent by year end.

Large leases over 50,000 square feet are nearly nonexistent. Landlords are seeing smaller users, those occupying 15,000 to 50,000 square feet, cut back. Many of them are housing related businesses -- flooring, roofing or plumbing suppliers -- that have left the market altogether as the housing market crashed.

Housing here is nerve-wracking. Prices have fallen more than 38 percent from the peak in December 2006. Flippers who cannot sell the 15 or so condos they bought as investments are renting them out at below-market rents.

All this bodes well for the Miami renter, but not for the landlord. Vacancy is expected to rise to over 5 percent this year from 4.4 percent at the end of last year, and rents should fall about 1.8 percent to $1,066.28 a unit, according to CBRE Torto Wheaton Research.

A Not So Happy 2009? Yep.

I made the local paper today with an article predicting the year ahead. For perspective, I did fairly well in 2008 but, like a lot of other folks in my business down here, many of us are concerned about the prospects for the year ahead. I don't know if I agree with a 50% drop in values over the year, but I can see some significant price cuts in BOTH lease rates and square-footage selling prices.

From the Sarasota Herald Tribune:

Unhappy new year for commercial Analysts say this real estate sector faces the biggest challenges in '09

By Michael Braga

Published: Monday, December 22, 2008 at 1:00 a.m.

The commercial real estate market has suffered this year as total sales and lease rates of everything from shopping centers to car dealerships have fallen.

But if you think things were bad this year, just wait until 2009.

"The next meltdown we are going to see is in commercial," said Gordon Hester, a Siesta hard-money lender whose customers include both commercial and residential developers. "The value of commercial real estate will probably drop 50 to 60 percent."

Investors began pouring money into commercial real estate in 2006, just after the residential real estate market peaked. Like residential investors, these commercial players abandoned the notion that properties need to kick off enough revenue to cover carrying costs, Hester said.

Instead, they banked on the bet that real estate could be purchased for one price and sold for a much higher price in a relatively short period.

"Now investors are only willing to pay based in returns," Hester said. "For that to shake out, values have to drop."

Unfortunately, the end of the "appreciation model" in commercial real estate coincides with one of the worst economic downturns since the 1930s.

Unemployment is up, consumer confidence and spending is down, and owners of shopping centers, hotels and office buildings are already feeling the pinch.

"After the Christmas season, we are going to see a ton of retailers and restaurants file for bankruptcy or go out of business," said Jack McCabe, a Deerfield Beach-based real estate consultant. "Obviously this will affect shopping centers and strip centers and the office market."

Sales dropping

The deterioration of the commercial real estate sector already is showing up in declining sales.

Only 89 properties in Sarasota County changed hands in 2008 for a total of $131.3 million, a 47.5 percent drop in sales volume from the 109 properties that sold for $250.3 million in 2007.

Office buildings saw the largest drop in dollar terms, followed by hotels and shopping centers.

"The whole thing is being driven by two things: the credit situation, which is nowhere at the moment, and investor confidence," said Stan Rutstein, a commercial agent with Re/Max in Bradenton.

Rutstein pointed to the fact that Nate Benderson, Nathan Forbes and the Taubman Cos. recently announced they were postponing construction of the new University Town Center Mall.

"If developers like Benderson, Forbes and Taubman, who are national scope, are being cautious -- if they don't want to take a risk -- then smaller players are not going to take a risk, either," Rutstein said. "Two-thousand nine is going to be a very challenging year."

Rutstein said that the only way commercial properties are going to move is if sellers come down hard on price. For example, a client who was offered $1.6 million from a bank for an acre near Wal-Mart in 2006, might only get $600,000 for that same property today.

"But there aren't any takers because banks are out of the market," Rutstein said.

The same downward trend is also affecting lease rates for both office and retail space, said Anthony Migliore, a commercial agent with Coldwell Banker in Sarasota.

"Landlords and owners are getting very reasonable," Migliore said. "There was one case in which the owners of an office building in Lakewood Ranch gave one year free rent to the Juvenile Diabetes Research Foundation in return for signing a long-term lease."

Of course, that is an extreme example, Migliore said. But it illustrates the kind of lengths landlords are willing to go to get space rented.

"They may not be able to sell the space, but at least they can get it leased and ride out the storm," Migliore said.

Vacancies on the rise

"If you are a shopping center owner and you evict someone this year, you're crazy," said George Huhn, a Venice-based commercial real estate agent. "Vacancies are going to go through the roof, and everyone will be competing for tenants."

A lot of landlords are opting to carry mom and pop retailers through the bad times with rent abatements, renegotiations of leases and forbearance agreements, Huhn said.

"They're just looking to keep the guy in business, because something is always better than nothing," Huhn said.

Retail sales in Sarasota County were down by nearly $70 million, or 11 percent, in September compared with the same month a year earlier, and that was before the financial crisis really took hold. So it is no wonder that retailers and landlords alike are struggling.

But as in the residential market where foreclosures have led to amazing deals for savvy investors, the collapse of the commercial real estate sector will provide ample opportunities for investors looking for deals.

"Banks already have commercial property available that they have foreclosed on," Rutstein said.

"A good amount of it is dirt that has plummeted in value."

For investors like Michael Averbuch, commercial land represents a once-in-a-lifetime opportunity.

"The biggest game in town is commercial land," Averbuch said. "Banks in Southwest Florida are nothing more than walking corpses. They are sitting on land and developer loans -- most of which are in default, and lot of that land will hit the market this year.

"The stuff is so distressed, that it can't get more distressed."

PricewaterhouseCoopers: Credit Crisis Halts Deals

For every positive article, there's a negative. From MarketWatch.

Commercial break
Credit crunch, economic turmoil halts commercial real estate deals: report

By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) -- Commercial real estate deals are, for the most part, on hold these days as buyers and sellers wait for the credit crunch to ease and the economy to rebound, according to a report released Thursday by PricewaterhouseCoopers.

Financing problems are keeping some deals stalled, but other would-be buyers just aren't willing to take a chance on properties as the country deals with increased job losses and problems on Wall Street, according to the firm's quarterly Korpacz Real Estate Investor Survey. They're questioning tenant demand in the near term for just about every type of property, from office space to retail, as workers lose their jobs and consumers tighten their purse strings.

"Few investors expect problems in the financial markets to ease any time soon and even fewer expect debt availability and lending practices to return to where they were prior to the credit crunch," said Tim Conlon, partner and U.S. real estate sector leader for PricewaterhouseCoopers, in a news release. "Uncertainty has stalled investments and dramatically reduced sales and leasing activity."

The roller-coaster ride that the markets have been on this week is only making matters worse, said Susan Smith, editor-in-chief of the survey and a director in the PricewaterhouseCoopers real estate sector services group.
"This just adds to more growing concern, more hits on confidence, more uncertainty on how long it's going to take to clean everything up," Smith said in a phone interview. "You're not going to see properties trade until investors are confident that the worst is over."

In the face of uncertainty, those who have commercial property now will likely hold on to what they have and ride out the correction, she said. Some investors are expecting an increase in distressed sales involving assets with nonperforming loans or discouraged owners in the coming months -- something that investors with capital on their hands may view as buying opportunities.

According to the report, the average overall capitalization rate showed a year-over-year uptick in an increasing number of markets. Higher cap rates typically mean lower values. Survey participants said they expected cap rates in each surveyed market to increase in the next six months.

That said, while the short-term out look is bleak, the long-term picture for commercial real estate is much brighter, Smith said.

Continue Reading...

Commercial Real Estate Problems are Behind Us, Say Experts

Experts speaking at this year's Commercial Real Estate Market Forecast had some interesting observations, not least of which is that the worst of the commercial real estate turmoil is several years behind us already. Interestingly, some believe the residential condo market will not be fully corrected for another twelve years or so. Yes, twelve years.

On the subject of commercial land, I believe things will pick up as soon as lenders get a little more motivated to provide construction loans for projects. First, however, we need some of the inventory to go away and that seems to be happening...slowly. From the Tampa Bay Business Journal.

By Margaret Cashill

Speakers at the 2009 Commercial Real Estate Market Forecast believe local executives are displaying cautious optimism, but said the greatest difficulties in the commercial real estate market are several years behind us.

The Tampa Bay Business Journal hosted the luncheon Thursday afternoon at the A La Carte Event Pavilion in Tampa, in partnership with the National Association of Industrial and Office Properties.

After an introduction from Bridgette Mill, president and publisher, the event featured five commentaries on the topics of investments, land, retail, industrial and office with Dallas Whitaker of Greystone Equity LLC and TBBJ Staff Writer Janet Leiser serving as moderators.

Steve Ekovich, first VP and regional manager of Marcus & Millichap Real Estate Investment Services, spoke of a “recalibration market” following the transition of recent years. He predicted that the inexpensive cost of doing business would benefit local retail, multifamily and office markets.

Bill Eshenbaugh of Eshenbaugh Land Company echoed Ekovich’s sentiment of a recovering market in his discussion of land. Recounting his travels to Pennsylvania, he mentioned a “groundhog” effect in the homeowner’s market following a three-year downturn.

He also predicted that for the condominium market, the cycle would not correct itself until 2020, based on past upturns in 1986 and 1972.

Pat Duffy, president of Colliers Arnold, addressed the subject of retail. Retailers are “cautiously optimistic,” he said. The rising cost of oil has decreased people’s disposable income, which decreases demand for shopping centers.

In speaking about industrial real estate, Ray Sandelli, senior managing director of CB Richard Ellis, said retailers are trying to move closer to populations. For the region, he believes activity will remain slow, flexibility in tenant renewals will increase and distribution centers will gravitate closer to customers.

Larry Richey, senior managing director of Cushman & Wakefield of Florida, Inc., commented on the state of the office market. Since Tampa Bay has lost 16,000 jobs in the last year, the first six months have seen more than 833,000 square feet of negative absorption in the market, he said. The cost to do business in Tampa is reasonable, however, and Richey predicted the cost of living will go down, and leave tenants with more options.

Richey also emphasized that the negative impact of the storm seasons in 2004 and 2005 is fading. The fact that the Bay area has a competitive cost has always helped the region, he said, and is beginning to help again.

Continue Reading...

Commercial Construction Costs Rise

A press release from New York-based Turner Construction shows a nearly 2 percent increase in the cost of commercial construction from Q2 of this year and over 6 percent since Q3 last year! From the Tampa Bay Business Journal:

Third quarter commercial building costs rose 1.77 percent over the second quarter and nearly 6.5 percent over the third quarter of last year, according to Turner Construction's Building Cost Index.

The index, which projects domestic commercial building construction costs, found that construction costs are rising faster than the Consumer Price Index.

The increase is due in large part to price hikes for steel, non-ferrous metals, petroleum-based products and energy.

Wage and benefit adjustments also are generally higher than a year ago, “reflecting the continuing strong demand on the skilled labor workforce,” said Karl F. Almstead, the Turner vice president responsible for Turner’s Building Cost Index.

However, increasing trade contractor competition in many market areas is offsetting some of the material and labor increases, the report found.

Turner has prepared the construction cost forecast for more than 80 years.

See the article...

Investors Confident About Florida's Future

Angel or vulture? You decide. It's certainly not a bad time to have cash, although I'm fairly certain commercial still has some room to drop. It sure ain't over. From MarketWatch.

Kitson & Partners and Their Investors Confident About Florida's Future
Capital partners commit $750 million for residential and retail acquisitions

PALM BEACH GARDENS, Fla., Sept 10, 2008 /PRNewswire via COMTEX/ -- A leading institutional investor is demonstrating confidence in the long-term prospects for Florida's real estate market. Chicago-based real estate private equity investor Evergreen Real Estate Partners and its backers have committed $750 million to Palm Beach Gardens-based developer Kitson & Partners to pursue additional residential and commercial real estate development projects in Florida.

Named 2007 Developer of the Year by Real Estate Finance & Investment for its work on the Babcock Ranch project in Southwest Florida, Kitson & Partners has an established track record of conscientious master planning and development throughout the State of Florida. Kitson & Partners has acquired in excess of $900 million of residential and commercial assets within Florida over the past two years. The capital commitment puts Kitson & Partners in a strong position to close additional deals as the opportunities present themselves.

"In a tight credit market, land owners are looking for certainty," Syd Kitson, CEO of Kitson & Partners, explained. "If our company makes an offer, we can close the deal with the seller. We have the financial strength to finish what we start."

Kitson said the firm is targeting high quality locations throughout the State of Florida including raw land, entitled land and improved or semi- improved land for residential development. The company is currently developing 21,270 acres in Florida which will include 25,770 residential units. Kitson & Partners is also actively seeking to grow its retail property portfolio by acquiring stabilized and value-added shopping centers as well as considering joint venture development opportunities. Kitson & Partners currently owns and operates eleven shopping centers around the state.

SOURCE Kitson & Partners

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TRIM Notices Are Here...Fight!

Got my trim notices about 10 days ago. My property taxes actually went down across the board (as well as my insurance). Some clients of mine are not so lucky - some are reporting increases in assessed value. According to the Palm Beach Post, the tax assessor's office is preparing for a record number of challenges this year. Story below:

By ALEXANDRA CLOUGH

If you own property in Palm Beach County, chances are you recently received a notice in the mail, explaining how the property appraiser's office valued your property as of Jan. 1, 2008.

And if you're like most people, in years past you might have been in the habit of tossing the notice on top of the pile of other paperwork to be filed.

But not this year.

Owners of both residential and commercial properties are expected to scrutinize their TRIM (Truth In Millage) notices in ways they never have before. These TRIM notices are important because they include a tentative tax notice.

Lower property values mean lower taxes, and that's something of interest to everyone.

Given the precipitous decline of the real estate market, many people will be pleased to see the market and assessed values of their property decline. But others will conclude their property value should be lower than the numbers determined by the country's property appraiser. Experts predict a wave of property value changes by homeowners hoping to cut their taxes.

"The economy is so bad, everybody is counting their dollars," said Jason Sharff, a North Palm Beach entrepreneur who has started a business to help homeowners challenge their property values.

During the go-go days of the recent real estate boom, the values of residences and commercial properties shot up, pushing values to astronomical levels. Taxes based on those higher values zoomed up, too. But since the market began its decline in late 2005, values steadily have fallen.

Not enough for some people, though, especially since the market is, and feels, so much worse than it did at the beginning of the year. Therefore, many property owners are expected to file petitions challenging the values of their homes or businesses.

The property appraiser's office is ready for it. Along with TRIM notices, the appraiser this year also sent out a detailed guide explaining the notice. (Check out the guide at www.co.palm-beach.fl.us/papa/index.htm). For the first time, the county also is allowing property owners to file an on-line petition to challenge values by clicking on the county clerk's Web site, at www.pbcountyclerk.com.

But it's likely most residential property owners won't even need to go that far.

First, "take a deep breath," said Tom Barnhart, director of appraisal services for the Palm Beach County Property Appraiser's office. Then, pick up the phone and call the property appraiser's office. At that point, property appraiser representatives can explain that even though home sales have cratered during the past few months, only the comparable sales pegged by Jan. 1, 2008, count.

"It's that snapshot in time, one day," Barnhart said.

While the property appraiser will consider sales that took place later in the month, it's really the sales from 2007 that help determine a property's value, Barnhart said. Sometimes a property's value can be adjusted if the homeowner provides data that supports a change in the value. Barnhart said the vast majority of challenges are resolved without a hearing, either because the homeowner accepted the appraisal or the appraiser's office received more information about a home that did change its value.

"We're here to work with you," Barnhart said.

If both sides can't agree, however, homeowners can spend $15 and file a petition to challenge their property value and appear before the Value Adjustment Board.

Some people would rather just hand off the process to someone else, however. In that case, there are professionals who can be hired to handle appeals for property owners. Delray Beach real estate attorney Michael Weiner, who handles property tax petitions for clients, predicts a "huge cottage industry" of companies designed to help more property owners challenge their property values.

One of those is Sharff's company, Real Estate Property Tax Fighters (www.reptf.com). Sharff, a 26-year-old armed with a business degree from the University of Florida, said he recently was brain-storming ways to capture business from the real estate downturn.

He came up with the idea of a business that, for a flat fee, will handle property value challenges for residential customers. For $59, he'll handle the paperwork and assemble comparable sales culled from the Multiple Listing Service (MLS) used by real estate agents. Then he'll provide this information to homeowners who can then move forward with their challenges. But for $169, or "the package deal," his company will take the added step of representing homeowners before the Value Adjustment Board.

"It's an intimidating appeals process," Sharff said, explaining why he saw a need for his business. And he thinks many customers signing up for his service just don't want to be bothered with the process, which is why more people are signing on for the $169 service that relieves them of having to make a personal appearance to challenge their property values.

Read the full story here.

Regs to Orion Bank: "Better Get It Together"

Looks like Orion just got slapped by regulators and have been told to straighten up. From the Sarasota Herald Tribune.

By John Hielscher & Michael Braga
STAFF WRITERS

Published: Saturday, August 30, 2008 at 1:00 a.m.
Last Modified: Saturday, August 30, 2008 at 1:09 a.m.

Federal and state banking regulators slapped Orion Bank with a major enforcement action, criticizing its lending practices and oversight by the board of directors.

Naples-based Orion, a major real estate lender in Sarasota and Manatee counties, was ordered to take a number of steps to maintain its "financial soundness."

The Federal Reserve and the Florida Office of Financial Regulation made public on Friday a 15-page "written agreement" with the bank and its parent company, Orion Bancorp Inc.

Orion faces a series of deadlines -- some as soon as next week -- to tighten its loan policies, better monitor its borrowers and charge-off as uncollectible more of its soured loans.

The agreement is one of only 15 such enforcement actions taken by the Federal Reserve against a U.S. bank so far this year.

"The Fed would not have made this public unless they determined it was a serious enough situation for them to do it," said bank analyst Ken Thomas of Miami.

Orion, a nearly $3-billion-asset bank, posted a profit of $8.3 million through mid-year.

It reported $108.9 million in non-current loans and leases as of June 30, up from $5.2 million one year earlier. That represents 5.25 percent of Orion's entire loan portfolio.

A sizable chunk of those bad loans were apparently made in Manatee and Sarasota counties, where the bank operates four branches.

In the past 18 months, Orion has foreclosed on 20 loans totaling $74 million in the two counties.

Sarasota home builder Ron Mustari accounted for $11.3 million of the defaulted loans. Condo converter Warren Hickernell accounted for $11.7 million.

Manatee home builder David Lewis accounted for $1.8 million in bad loans, and Siesta Key developer Jack LeFrock accounted for $1.3 million.

Orion's financial picture could change under the Federal Reserve agreement.

Within 10 days, the bank must eliminate from its books an unidentified amount of assets it now classifies as losses but has yet to charge-off.

The privately owned Orion has long been headed by Jerry J. Williams, who acts as chairman, president and chief executive officer.

Neither he nor his public relations firm returned calls Friday seeking comment.

The 31-year-old bank has been consistently profitable, boasting of industry recognition as a top-performing Florida bank.

The agreement's first order directs the bank to improve the board's oversight of management and operations. Thomas said it is unusual for the board to be cited first thing in such an action.

"It's suggesting that the current board is not strong and needs to be strengthened," he said.

Speaking generally and not about Orion specifically, Thomas said banks whose CEOs are also board chairmen often wind up with rubber-stamp boards and too much power concentrated in one person.

The bank has 90 days to submit a plan to reduce its concentration of commercial real estate loans.

Within 60 days it must revise its loan policies on renewing credit to existing borrowers, and revise its loan-to-value limits to follow federal regulations.

Enforcement actions by federal or state banking regulators are considered serious actions.

First Priority Bank of Bradenton was hit with a "prompt corrective action directive" by the Federal Deposit Insurance Corp. just one month before it became the nation's eighth bank failure of 2008.

Venice-based Community National Bank of Sarasota County entered into a "formal agreement" with the Office of the Comptroller of the Currency in April to toughen its lending operations after the agency discovered "unsafe and unsound" banking practices. Read story here.

Retail and Office Delinquencies Shoot Up

From CoStar:

Increased volatility in the office and retail sectors have led to a two basis point increase in U.S. CMBS delinquencies, according to the latest Fitch Ratings loan delinquency index. While overall delinquencies increased only mildly for the fifth consecutive month, the retail and office sectors led the index with net increases of $70.5 million and $62.2 million, respectively.

Despite relatively stable performance to date, Fitch remains concerned about the retail sector.

"An increase in retail bankruptcies and a continued decline in consumer disposable income are evident, though they have yet to impact retail performance," said Susan Merrick, managing director of Fitch. "High energy and commodity prices, rising unemployment, housing market weakness, and lower credit availability continue to negatively impact retail sales and are expected to dampen retail sector growth going forward. Recent store closings, including continued bankruptcy filings of tenants such as specialty retailer Linens 'n Things and discount-apparel retailer Steve & Barry's, will impact retail performance."

Retail loan delinquencies increased 25.7%...Click here for the rest of the article.

Colonial Bank Purchases New Branch in Osprey

28 July, 2008 - Colonial Bank N.A. (NYSE: CNB), has purchased an approximately 2,900 square foot condo at 24 East Bay Street, Unit 11, Building A-3, Osprey, Florida from Bay Street Partners, LLC for $1,455,725. Colonial's new branch, which includes two drive through lanes is expected to open sometime in 2009. Anthony V. Migliore and Paul Klick of Coldwell Banker Commercial NRT represented Colonial Bank and Ray Rodriquez of Florida Rays Realty represented the seller.

"This just underscores the fact that there is positive news with regard to banks expanding in this economy," says Migliore who represented Colonial Bank. "This is a strategically important site for my client."

The Colonial BancGroup, Inc., is a $27 billion financial services company headquartered in Montgomery, Ala. Its common stock is traded on the New York Stock Exchange under the symbol CNB. They are both a Fortune 400 Platinum Company as well as a Fortune Global 1000 company. Colonial currently has more than 340 banking offices in Alabama, Florida, Georgia, Nevada and Texas.

Colonial Bank: http://www.colonialbank.com
Coldwell Banker Commercial NRT: http://www.cbcworldwide.com

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Proscenium A Go Go

The Herald's reporting the city has given the go-ahead to the massive Proscenium project on 41 downtown.

From the article:

"In adopting plans for a Hospitality Regional Activity Center and a "proportional fair share agreement" for the planned $1 billion real estate development, commissioners opted for jobs and tax revenue over fears of congestion.

Proscenium, with office space and shops, more than 200 upscale condominiums and an 800-seat theater, is expected to generate roughly $2.8 million a year in property taxes and house more than 1,000 workers -- though many will likely come from existing office users -- when completed in 2011."

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