Saturday, Sept. 12, 2009 | 11:48 a.m.
Corus Bank, known as the nation's poster child for aggressive condominium development lending during the economic boom, was closed and seized by regulators Friday due to mounting losses.
They now plan to sell the bank's loans and inventory of foreclosed properties, which include some high-profile Las Vegas projects.
The Federal Deposit Insurance Corp. said Corus was closed by the Office of the Comptroller of the Currency, which appointed the FDIC as receiver. MB Financial Bank of Chicago assumed all of the deposits of Corus Bank and about $3 billion in assets comprised mainly of cash and securities.
"The FDIC will retain the remaining assets for later disposition. The FDIC plans to sell substantially all of the remaining assets of Corus Bank in the next 30 days in a private placement transaction," the FDIC said.
As of June 30, Corus had loans and other assets of $7 billion and deposits of about $7 billion.
In a regulatory filing this summer, parent company Corus Bankshares Inc. of Chicago said that as of March 31, it had $2 billion in non-performing -- or bad loans -- in which the borrowers were not expected to pay all the principal and interest due. These included three condominium loans and a commercial loan in Las Vegas totaling $182 million.
As of March 31, Corus said three of the troubled Las Vegas projects it financed had a total of 825 condominium units remaining to be sold.
"Corus is suffering from the extraordinary effects of what may ultimately be the worst economic downturn since the Great Depression. The effects of the current environment are being felt across many industries, with financial services and residential real estate being particularly hard hit. The effects of the downturn have been particularly severe during the last 180 days of 2008, and have continued into 2009. Corus, with a portfolio consisting primarily of condominium construction loans, many in the hard-hit areas of Arizona, Nevada, south Florida and southern California, has seen a rapid and precipitous decline in the value of the collateral securing our loan portfolio. Thus, we are experiencing significant loan quality issues," Corus said in its first quarter financial statement disclosing a loss of $301 million for the quarter, including a charge of $209 million for credit losses.
The bank's Las Vegas borrowers include the downtown Streamline Tower condominiums. In July, records indicated Corus was owed $108 million on that property, which had been taken into bankruptcy and was later foreclosed on by Corus. Of 275 condominiums there, just 27 had sold, Corus said in a court filing.
Another big project Corus has foreclosed on is the One Las Vegas condominiums at 8255 Las Vegas Boulevard South, at Blue Diamond Road/Windmill Lane. Corus extended $140 million in credit to the project in 2006.
Besides a lack of condominium sales for the twin-tower, 359-unit development, it's mired in litigation involving unhappy condominium buyers.
In a lawsuit pending in U.S. District Court in Las Vegas, buyers of eight condos claim the developer Midbar Condo Development L.P. and Corus subsidiary 8255 Las Vegas Marketing Corp. failed to provide promised amenities at the project including:
--A "massive palm grove pool"
--"Lush, beautiful landscaping"
--A multimedia theater room
--A conference room
--A business center
--An outdoor event center
--Two guard-gated entries, including an elaborate entrance from Las Vegas Boulevard
--Outdoor hot tubs
--A boutique hotel including a 20,000-square-foot health club and spa
--A half-mile perimeter fitness trail
--Multiple dining venues
--Five residential towers
"None of the above amenities and improvements have been constructed and/or completed," the buyers charged in their lawsuit. Those claims have been disputed by the defendants.
Other local projects financed by Corus include Meridian ($111.3 million), Platinum ($87.6 million), Loft 5 ($56.5 million), Juhl ($106.2 million), Newport Lofts ($67.1 million), Panorama Towers ($236.3 million), Village Green ($60 million), the Residence Las Vegas ($56.8 million), Soho Lofts ($49.3 million), Copper Canyon ($43 million), Boulders at Lone Mountain ($40.2 million), Verano ($39.5 million) and Spanish Palms ($28.2 million).
Other than the One Las Vegas and Streamline developments, it wasn't immediately disclosed if Corus held any unsold condominium units in these or other local projects.
The Wall Street Journal reported that potential buyers of the Corus condominium assets around the country are Related Cos., Lubert-Adler Partners LP and other investors; a venture of Miami-based developer Crescent Heights and Dallas-based investor Lone Star Funds; Colony Capital LLC, iStar Financial Inc. and Starwood Capital Group. Las Vegas investment groups had earlier expressed interest in the Streamline Tower.