Lehman Bails Out Of Fancy Beach Condo; Unloads Loans On Eager Bad Debt Buyer; Construction Liens Pile Up As Builder Accused Of Stiffing Subs

In Miami Beach, Florida the Daily Business Review reports:

• The Canyon Ranch Living condominium and condo hotel looked like a safe bet two years ago when Lehman Brothers assumed more than $400 million in construction loans tied to the ultra-luxury Miami Beach project. But even ultra-luxury projects backed by brands like Canyon Ranch aren’t safe in this housing meltdown. Now, embattled Lehman has sold the loans – which weren’t paid when they came due – to an investment group that specializes in buying bad debt and other distressed assets. In May, Fortress Investment Group acquired two Canyon Ranch construction loans totaling about $400 million from Lehman.

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• Canyon Ranch developer WSG Development didn’t pay off the two construction loans when they came due. It also continues to pile up liens by contractors who claim they’re owed millions for construction work done and material supplied. Lehman Brothers in April agreed to give WSG another year to pay off the loans instead of foreclosing on the mortgages. But the next month Lehman, which is struggling under massive loan defaults, unloaded the debt.

Adding to this ugly picture is the fact that local court records show about two dozen suits involving buyers who don’t want to close on their contracts for condos at the Canyon Ranch project, according to the story. Presumably, there are at least some buyers who can't close because they're having trouble lining up a lender to fork over the financing on what may now be overpriced property and are reluctant to walk away from their deposits.

For more, see Condo Meltdown: Bailing out of Canyon Ranch.