Developer Daniel Kodsi aimed as high as couture fashion designers in his vision of a glimmering Miami skyline agleam with luxury condo towers.
The “Dior of Development” had a triple vision for his Paramount project in the glory days of the building boom, but the former high flyer’s plans have clearly unraveled. Kodsi and his partners pulled the plug on several projects before construction even began, and he faces foreclosure from lenders on at least three projects.
“How can you take away credit and still have a real estate market? Take away credit and you kill 95 or 97 percent of the real estate market,” said Kodsi, 40, a second-generation housing developer who heads Boca Raton-based RPC Diversified Holdings.
Today, only one of Kodsi’s designer luxury towers, Paramount Bay, at 2066 North Bayshore Drive in downtown Miami, is near completion. The high-tech tower overlooking Biscayne Bay rears 47 stories into the sky. Its 346 residential units include a penthouse that sold for $5.4 million. Slated to open in May, the average Paramount Bay condo sells for $1 million. Kodsi said that 75 percent are presold.
Paramount Bay, the first in Kodsi’s branded line of condos, is not in foreclosure.
But his two neighboring towers of envisioned hyper-tech luxury are. Construction never began on the now empty lots. Recently, Kodsi and his various partners got the attention of their lenders and potential buyers trolling for bargains in a distressed market when they stopped interest payments, triggering defaults on their loans.
“The partnerships that wanted to develop this land want out,” said Kodsi. “They don’t want to continue paying the notes, throwing good money after bad when they feel the land isn’t worth it. They feel the land is underwater. I’m a developer, not a land speculator. Unless it’s going to be built, there is no reason to sit on it.”
Kodsi started in the development business sweeping out newly-constructed beach condos for his father, Joseph. The market has humbled them both, he said.
“This is the worst market anyone has seen since the 1930’s,” Daniel Kodsi said. “My father is 71 years old and he has never seen it this bad.”
In 1991, Kodsi and his father teamed up and built condos and single-family homes in gated and resort-style communities that grew increasingly upscale in recent years. To date, Kodsi boasts of having built more than 4,000 residential units.
But Kodsi has hit the hard asphalt realty of tightening credit and the consequences of promiscuous, lender-sanctioned overbuilding.
According to Miami-Dade County court records, Hillcrest Bank of Overland, Kansas, which has $22 million in loans on a luxury mixed-use project called Paramount Park at 700 Biscayne Boulevard, filed for foreclosure February 3 on the 1.66 acre parcel which sits across the street from the American Airlines Arena where the Miami Heat plays in downtown Miami. The bank is seeking the remaining $21.2 million on the loan.
Kodsi and his partners had envisioned 300 condos, 286 hotel rooms and 10,000 square feet of retail space. But Kodsi said he and his partners halted development “by choice” because of overbuilding and stopped payments when the market tanked and they felt the loan cost more than the land.
Gary Lehman, an attorney for Hillcrest, declined to comment on the lawsuit.
Now, though, to hear Kodsi talk, foreclosure sounds like a financial tool to get the attention of lenders to strike different terms and spark buyers’ interest.
“Buyers want deals, they are looking for bargains in this distressed market,” he said.
Another planned tower, Paramount Beach, was slammed with a foreclosure notice on December 22. According to Miami-Dade County court records, iStar FM Loans holds a $32.2 million loan signed in November 2006 with a Kodsi partnership called Sunny Isles Development Company, which planned to build a 232-unit condo tower on Sunny Isles Beach. Kodsi and his partners stopped payments in October, triggering foreclosure.
Nathan Nason, iStar’s attorney in West Palm Beach, declined to comment.
In Broward County, Carolina First Bank filed a foreclosure lawsuit last October on an $8 million property that never got started. Kodsi said he wants to walk because the land has lost so much value.
He’s also bailing out of an ambitious Las Vegas project, but he remains undaunted.
“We will survive in this distressed market. And we will survive as developers,” said Kodsi.