Barry Sternlicht, one of the busiest buyers during the economic downturn, plans to transform the 47-story Paramount Bay condominium in Miami into a haven for wealthy buyers, the New York Times reported. Though the condo is in need of serious repairs, Sternlicht — best known for creating Starwood Hotels & Resorts, which he built into a public company with $6 billion in annual revenue — is not deterred. In the last year and a half, his private equity firm, Starwood Capital, has raised more than $3 billion. He recently acquired the $4.5 billion real estate loan portfolio of Corus Bankshares, the nation’s largest condominium construction lender until it failed last September because it had financed too many projects like Paramount Bay. The following month, Sternlicht and a group of investors won the loans in an auction run by the Federal Deposit Insurance Corporation, paying $554 million for 40 percent of the package. The FDIC holds the remaining 60 percent. Sternlicht now hopes to foreclose on many of Corus’ errant borrowers, restyle their buildings and sell units for a significant profit once the real estate market recovers. Though some are skeptical about his prospects, others believe Sternlicht will succeed, though it may take several months to see the results. [NYT]

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A massive U.S. commercial real estate crash is in its beginning stages, billionaire Wilbur Ross said today. The WL Ross & Co. CEO, who is also working on a government program to rid banks of their toxic assets, said he is practicing extreme caution on the commercial real estate investments front, especially with regard to office spaces, which are rapidly shedding tenants. Though the Public-Private Investment Program has made $1.5 billion in pooled government and private funds available to his company for purchasing banks’ distressed assets, Ross said he had used less than $100 million of those funds by Oct. 15, and that the money he spent went toward residential mortgage-backed securities rather than commercial properties. Earlier this month, WL Ross, along with several other firms led by Starwood Capital Group and TPG, agreed to buy $4.5 billion in real estate from the seized Corus Bankshares, after the bank’s investments in construction loans for condominiums went sour. [Bloomberg]

Chicago-based Corus Bankshares, which was badly hurt with failed loans
to Florida condo projects, is looking for a recapitalization or a sale
to repair its battered financial condition. Potential buyers include
Los Angeles billionaire Thomas Barrack’s Colony Capital LLC and Related
Cos., Stephen Ross’s New York development company, according to reports.
Distressed banking assets are of particular interest to vulture
investors. [more]