Condo crash burns big, sophisticated investor, too

It's not just schoolteachers, bartenders and other real estate amateurs who got burned by the condo crash. Some big, seemingly sophisticated investors are taking hits, too.

Condo converter Tarragon Corp. (Nasdaq: TARR) of New York just unloaded the 311-unit Floresta Apartments at 400 Via Royale in Jupiter for a hefty 28 percent loss.

Tarragon bought the complex for $83.95 million in February 2006, just after the condo boom ended. It sold the apartments this month for $60.25 million, according to property records.

The buyer was TGM Associates, which paid Tarragon $71 million for an apartment complex in Abacoa in October.

Tarragon has been in the midst of a nationwide fire sale. It said last month that it expected to write off $350 million as a result of the falling values of its properties.

Shares in Tarragon have plunged from more than $20 in early 2006 to less than $2 now.

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More evidence of a slowing commercial real estate market: An $80 million deal for Vista Business Park west of West Palm Beach has fallen through.

When owner Steve McCraney contacted institutional investors this summer about selling the 500,000-square-foot industrial complex and two smaller warehouse parks, the offering was expected to be a home run that would net $100 million, thanks to a white-hot industrial market. What a difference a few months make.

"We're back to a real market," McCraney said last week.

The winning bidder's financing recently fell through, and McCraney said he's talking to other bidders. Belvedere Business Park in Palm Beach County and Treasure Coast Commerce Center in Martin County no longer are part of the package.

McCraney described himself as "an ambivalent seller." After all, he bought the land cheap and enjoys high occupancy rates.

"If it doesn't sell, we're great with that," he said.

But with residential real estate faltering, brokers say potential bidders are taking a harder look at McCraney's tenants and realizing that many of their fortunes are tied to the housing market.

The housing slump "is affecting everybody," said Randall Greene of Palm Beach Gardens-based Catalfumo Construction and Development. "There's even a spillover into the Class A office market."

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When German firm Biotest Pharmaceuticals paid $185 million for Nabi Biopharmaceuticals on Dec. 4, it also bought Nabi's real estate at Arvida Park of Commerce in Boca Raton.

Biotest paid Nabi $30.3 million for 23 acres at 5800 and 5900 Park of Commerce Blvd., according to property records. That price was part of the $185 million deal, Nabi told the U.S. Securities and Exchange Commission.

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Has Callery-Judge Grove's 3,500 acres in the middle of Palm Beach County escaped the plunge in property values? One appraiser thinks so.

Gyrodyne Co. of America (Nasdaq: GYRO), the St. James, N.Y., company that owns 10.93 percent of Callery-Judge Grove, said this month that an appraiser it hired valued the land at $205 million as of June 2007.

That's down only 0.36 percent from a 2006 estimate by the same company, Pinal Appraisal Services, Gyrodyne said.

Source : http://www.palmbeachpost.com/