Investors In Decade-Stalled Sail Club Project In WPB Ready To Tear Down, Start Over

Jun 17, 2015 No Comments by

The hollowed, graffiti-sprayed shells of a low-income complex that never quite got torn down are all that remain of the Sail Club project.

They squat behind weeds and “No Trespassing” signs on 11 acres just across Clear Lake from downtown West Palm Beach, a site that once held the promise of hundreds of sparkling condos.

An eyesore for a decade to Okeechobee Boulevard motorists, the crumbling, pale yellow buildings represent a prolonged disaster for 206 mainly elderly investors who pitched in $25,000, $50,000 or $100,000 worth of life savings to a real estate syndicator who loaned $16 million to the condo developer in 2005 — just months before the biggest real estate collapse in modern history.

But now, after a 10-year battle in bankruptcy court, the investors last month regained control of the site and are ready to start over, says Donna Cangelosi, trustee for the new ownership group, WPB Clearlake SPE LLC. Cangelosi, who was one of the investors and has reluctantly assumed the mantle of turnaround manager, has joined with commercial real estate firm Sperry Van Ness, of Miami, to find a new buyer or joint venture partner to build apartment towers or condos on the   site at 719 Executive Center Drive.

Matthew Rotolante, managing partner at Sperry Van Ness, ballparks the property’s value at $12 million to $14 million, but says the price it fetches will depend on the eventual developer’s ambitions.

Current zoning would allow 32 units an acre, or just under 400 apartments. The site originally won approval for four 12-story towers with a total of 596 condos, but those approvals have long since expired, and any effort to revive that plan and seek waivers would require public hearings and a longer process than just going with current rules.

Rotolante expects that WPB Clearlake will pick a buyer in four to six months and that rental apartments will be built, which could later be converted to condos.

He and Cangelosi have met with City Administrator Jeff Green and say they’re negotiating a deal to have the city tear down the dilapidated buildings in the meantime.

The mayor’s office says it’s looking forward to seeing the buildings gone. The ownership group or future buyer would reimburse the city, Rotolante said.

According to Daniel Hayes, fiduciary for original developer Homes for America Holdings, the condo project hit the market just before the economy collapsed in the Great Recession, taking the wind out of the developer’s sales.

They pre-sold 110 condos, but that number was insufficient to qualify for a construction loan, Hayes said, so deposits were returned to the buyers   .

The demolition of the original low-income apartments ground to a halt.

The syndicator to whom the developer owed roughly $16 million, USA Commercial Mortgage Co., filed for Chapter 11 bankruptcy in 2006, following a Securities and Exchange Commission investigation of how the lender and its affiliates financed construction projects. The bankruptcy filing left the investors with no West Palm Beach project and a protracted court battle to gain control of the property.

With that done, Cangelosi said the good news is that “The market is getting better, the credit markets are easing up.”

As she and Rotolante note, several projects are sprouting downtown and the Sail Club site is just down the street from the busy new Palm Beach Outlets mall, where more construction is planned.

The city has shown interest in eventually having a boardwalk or trail around the lake that would make it easier for bicyclists or pedestrians to travel between the property and the downtown area.

Prospective buyers have been inquiring about the Sail Club property for some time, Cangelosi says. “Interest is continuing to climb.”

 

Source:  Palm Beach Post

 

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Industry News, Multifamily, Palm Beach County Multifamily
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