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A tough sell looms in Miami

Published Oct. 18, 2005

It's one of Miami's most significant office towers in terms of development costs and architectural design. Now, federal officials will find out how much it's worth.

The CenTrust office tower, headquarters for the once high-flying CenTrust Bank, will be listed next month for sale to the highest bidder. During the next few weeks, the Resolution Trust Corp. (RTC), the federal agency formed to clean up the S&L mess, will launch an international campaign to sell the 47-story skyscraper.

It is the most expensive property in the portfolio of the RTC's Tampa office, said Al Esther, director of real estate in Tampa. The building, which is valued at more than $100-million but will be appraised before the auction, is one of 1,000 office buildings, shopping centers, houses and condominiums in the Tampa portfolio.

The tower is just another symbol of the opulence of David Paul, the big-spending chief of CenTrust Bank. Paul, who is under investigation for his extravagance, moved CenTrust into the pricey building in 1988. In addition to the plush office furnishings, he dressed up the building's exterior, hiring New York specialists to provide brilliant and colorful nighttime illumination.

While the Tampa RTC office is charged with disposing of CenTrust's assets, including the tower, the marketing of the building is being handled by the RTC regional

office in Atlanta.

A third and final appraisal on the CenTrust tower is expected Friday, said Ed Nutting, regional sales center coordinator in Atlanta. The RTC will set a minimum price and distribute information about the property to foreign and domestic investors, pension funds, insurance corporations and other potential buyers.

The agency already has received about 200 requests for information, Nutting said.

"We want to have sealed bids by Dec. 18 and close (on the sale) 30 to 60 days later," Nutting said.

But despite the new plans to solicit bids, the gleaming skyscraper could be a tough sale.

Miami's downtown office vacancy rate jumped to 29 percent in the third quarter this year, up from 24 percent in the same period in 1989, according to the Miami office of Coldwell Banker Commercial Real Estate Services Inc.

Meanwhile, about half of the 585,000-square-foot CenTrust tower is vacant. Most of the space was emptied earlier this year when the RTC closed CenTrust.

Also, some potential buyers may be confused by the deal, which will require negotiations on leases with the city of Miami. The city leases land and air rights for the tower, which is built over a city parking garage, for about $700,000 a year, Nutting said.

While the lease is good for 80 years, it may cause concern among some potential investors who are not familiar with such leases, said Arnold Matteson, a broker with Coldwell Banker. "From a value point of view, you're not dealing with the land, you have to deal with just the building," he said.

The real estate in the Tampa RTC office's portfolio has an estimated appraised value of $480-million, including the CenTrust tower. The distressed properties make up only part of the office's total $4.8-billion worth of assets, which range from home mortgage loans and junk bonds to office furniture and equipment.

In the third quarter ended Sept. 30, the Tampa office collected $1.9-billion on sales of assets, including $1.7-billion on sales of securities. Sales of real estate, the most visible part of the RTC portfolio, totaled $5-million.

_ Information from Florida Trend magazine was used in this report.