Matt Weidner – Fighting For The American People

On Sunday, August 23, 2009, the St. Petersburg Times published an article which detailed the troubles dogging the Signature Place Condominium in Downtown St. Petersburg.  http://www.tampabay.com/news/business/realestate/high-stakes-battles-for-st-petersburg-high-rise-signature-place/1029883 The article contained quotes from Joel Cantor, the project’s developer and designer where Cantor tried to dispel many of the negative rumors and speculation surrounding the project, but his quotes only serve to reinforce the view on the street that the project is in major trouble.  The article asserts that Cantor has closed on 56 of the condos in six weeks.  Although the article isn’t clear on this point, it seems that the 56 closed in six weeks is the total number of condos that have closed in the building out of a total of 177 for sale.

Hidden Dangers For Purchasers

The real question for this project is when (if ever) will  the remaining 126 units be sold and what unforeseen liabilities will be faced by those purchasers who  buy into a building with such a small number of units sold.  The reality is the residential real estate market will not show the type of dramatic improvement that would be required to close all these units at any time in the foreseeable future. The inventory of residential real estate for sale in Pinellas County grows by thousands each month and the number of real purchasers for these properties continues to shrink each month.  Unemployment numbers in Florida and the Tampa Bay area continue to grow http://www.tampabay.com/news/business/florida-unemployment-107-in-july-tampa-bay-up-slightly-to-113/1029663 and the real estate market will not improve until a solution to the unemployment crisis is reached.  The bottom line is it is virtually inconceiveable that any significant number of the remaining units at Signature Place will sell at any time in the imediate future. This very real possibility poses significant risks for anyone who has already purchased in the building or who is considering doing so.

Delaying the Inevitable

In the article, Cantor admits that he has entered into an agreement with the project’s lender, presumably an agreement to suspend demand for payments for some period of time while both parties wait to see if the economy improves and enough units sell to begin repaying the debt that encumbers the building.  Cantor also admits that part of the agreement includes a reduction or waiver of profit he attempted to make on the building; he would simply like a return on the investment he put into it.  Given the low number of sales and the immense building and carrying costs, it’s hard to imagine a scenario where a developer in this situation could recover his investment, much less any expected profit.  If all this is true, and the agreement with the lender is a temporary solution, foreclosure or lender assumption of the whole property would be the end result if sales don’t come….and fast.

Every project of any significance is going to have warranty/defect/design issues that must be addressed initially and then on an on-going basis.  Windows will leak, stucco will crack, sinks will leak.  In a perfect world your builder/developer (who has an incentive to keep working to resolve problems to protect his profit and future sales), will step up and promptly resolve all these issues.  When, as admitted in the article, the developer/builder’s profit potential is removed from the equation, one can only wonder how promptly such issues will be addressed.  Consider that if the builder/developer files bankruptcy are the resources even available to address such issues?)

Bottom line is the project is in trouble and the article and quotes did nothing to dispel these realities.

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