"Taking A Haircut", Leaving Struggling Developers In Control Among Unpleasant Options For Some Lenders Stuck In S. Florida Condo Quagmire

In South Florida, the Miami Daily Business Review reports:

• [W]ith a number of South Florida condominium projects in various states of completion or financial distress, however, not every lender is taking so hard a line [on demanding prompt loan payments]. Many are showing more patience with struggling developers than in past downturns — not entirely by choice. “In many cases, they just don’t have the staff to take over a building. They don’t have that expertise,” said Rosendo Caveiro, head of Cushman & Wakefield’s apartment brokerage services group and a director at Miami-based Terrabank.

• That has left lenders with exposure in the South Florida condominium market — ranging from locally owned Ocean Bank to big out-of-state players like Chicago’s Corus Bank and New York City-based iStar Financial — with some unpleasant options. They include leaving a struggling developer in control of the project or selling the debt at a deep discount and taking a haircut on the loan.

For more, see Special Report: Commercial Lending (may require free registration).

In a related story, see The Wall Street Journal: Small Banks' Reckoning Day Is Coming (Billions in Troubled Construction Loans Promise to Pose Test for Regional Lenders).

Which Banks Will Feel The Pain?

See a sortable list of small and regional banks with sizable exposure to construction and land loans and with notable delinquency rates (available online courtesy of The Wall Street Journal).