Condo Capital Solutions Strategy

Condo Capital Solutions Strategy

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Our Target Markets:

CCS is focusing on markets that have experienced significant over-building or over-conversion and which are now seeing dramatic price deflation.

Florida:

  • Miami;
  • Fort Lauderdale;
  • West Palm Beach/Boca Raton;
  • Orlanda;
  • Tampa Bay;
  • Fort Myers/Naples;

Arizona:

  • Phoenix;
  • Tucson;

Nevada:

  • Las Vegas;

California:

  • Distressed Markets;

In our target markets, we are targeting troubled condo projects:

  • Notes in default (mezzanine and first mortgages)
  • Deals in bankruptcy or foreclosure
  • Failed condo conversions
  • Partially sold new condo and townhouse construction

Florida Condos - the Emerging Opportunity

Housing in Florida is experiencing a perfect storm resulting from:
  • Overbuilding - creating a deluge of excess condo units;
  • Slowing sales velocity and falling prices;
  • Tightening mortgage standards for condo buyers;
  • Rising foreclosures and bankruptcies;
  • Builders and converters under water in failing projects;
  • Banks and mezzanine lenders with distressed loan portfolios;

This overbuilding and boom/bust cycle is hardly new. For instance values in two previous Florida condo cycles experienced massive price run-ups, followed by precipitous drops (as much as 50%, which we term ‘price hyper-contraction’). Each time, the Florida condo market has recovered. After the current severe disruption (2006-2009), the long-term prospects for recovery in the condo market are excellent, due to:

  • Demographic shifts, as 70 million aging Baby Boomers retire;
  • Interest from foreign buyers, buying into a weak U.S. dollar;
  • A recovering economy (2010-2015)

Timing - Our View:

Condo markets are now in freefall, and are likely to worsen in 2009. However, we have been able to buy selective opportunities already. Though the bulk of our buying will occur in 2009-2010, our Phase II fund is seeking investor commitments for opportunities in 2009and 2010. Phase I investors will be invited into the Phase II fund, which will be launched in late 2009. In the meantime the principals are investing their own capital in early deals, staffing up, finding "In Field Partners", and gaining credibility as capital buyers in our target markets.

As housing finds a bottom in 2009, CCS expects to be well positioned to complete its capital raise and acquire distressed assets in the largest opportunity since the Savings and Loan crisis of 1986-1991.

Florida South West