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East Lake condo complex taken over by Corus Bank of Chicago

In one of the region's costliest property foreclosures, Lansbrook Village, a 774-unit condominium complex in East Lake, was repossessed by its lender Wednesday for failing to pay $75 million in debts.

Chalk it up as another victim of the condo conversion craze that swept the Tampa Bay area five years ago.

Lured by stories of easy profits made with easy-money loans, developers frantically converted more than 25,000 Tampa Bay area apartments into condos between 2001 and 2006. The conversions consumed about a fifth of the apartment stock in Pinellas and Hillsborough counties.

But for lenders such as Corus Bank of Chicago, the lender left in the lurch at Lansbrook Village, many Florida deals turned out to be built on unfulfilled hype.

During the housing boom, Corus poured more than a $1 billion in loans into Florida for condo projects. Its record of success in the Tampa Bay area has been mixed at best.

Across the bay in Tampa, the Chicago bank also lent $84 million to Novare-Intown to build the Element, a 400-unit downtown condo tower. Sales there collapsed along with the housing market, and developers decided to lease units pending a real estate recovery.

It was clear by early 2006 that the conversion mania was misplaced. In the Tampa Bay area alone, more than 10,000 apartment-to-condo conversions sat empty. Of the units that sold, most buyers were investors.

"Investors dominated that market. In many projects, investors were 75 to 80 percent of buyers," said Tampa Bay area housing consultant Marvin Rose. ''There would be a project in Temple Terrace and you'd have 100 buyers from Hialeah."

In the case of Lansbrook, in an unincorporated area of northeast Pinellas County, Corus lent developer Vista Realty Partners $112 million in 2006.

The Atlanta developer's acquisition of the former apartment complex was ill timed. The conversion boom was largely over before renovations were complete. Developers sold about 260 units for between $100,000 and $250,000 before the housing market shriveled in 2007 and 2008. Vista decided to rent out units it couldn't sell.

"Now you've got a fractured community, one part rented, one part owned," said Jeff Rogo of the Bay Area Apartment Association. "For those that bought, that's clearly not what they thought they were buying into."

The bank took back the common areas of the condo property, including its three swimming pools, as well as the hundreds of unsold apartments. The foreclosure has nothing to do with the Lansbrook Golf Club or the single-family neighborhood of the same name.

Not that bank ownership could cripple property values much more than the bum market already has. Lansbrook Village units that sold initially for $150,000 generally fetch far below $100,000 these days.

Steven Cobb is one of the buyers that scooped up a foreclosure deal. Cobb said he bought the condo "dirt cheap": $63,000 for a unit that once sold for $167,000.

Because he owns the condo, Cobb isn't sweating the ownership change. Common areas could be a different story. "As far as landscaping is concerned, that could be a problem," he said.

Times staff writer Brian Spegele contributed to this report.

East Lake condo complex taken over by Corus Bank of Chicago 08/12/09 [Last modified: Tuesday, August 18, 2009 4:22pm]
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