Financing difficulties force change; at least 70 buyers left in lurch
Wednesday, January 27, 2010 3:05 AM
The Ibiza condominium project was to be "the embodiment of an idealized city life," an 11-story
But now that developers have decided to build apartments instead of 135 condominiums on the
"This dream will never come to fruition," said Maria M. Unterbrink, who deposited $7,500 nearly
Unterbrink is one of more than 70 buyers who deposited an estimated $1 million total on their
"I think people are really concerned about getting their deposit," said Mark McGuire, who put down $16,000 nearly two years ago for a condominium.
Ibiza's developers insist that they are doing everything they can to return the deposits. But they acknowledge the money was spent on the project and that they must get the apartment funding before they can return deposits.
"Our goal is for their money to get returned. It's just a matter of time," said Raymond Brown, the managing partner of APEX Realty Enterprises, a sister company to the developer, ARMS Properties.
"We don't want to abandon the project," he said. "We're highly invested as well. We have more to lose than anybody."
In a letter to future occupants, developers blamed the change on "the meltdown of the mortgage market."
Brown said ARMS had an agreement with Huntington Bank to serve as the lead lender for the $35 million project, but that Huntington pulled out in late 2008.
"That left us in 2009 out in the market, and it was a shaky financial market," Brown added. "After we exhausted banks, we went to private-equity funds, and we kept hearing that if this project was a rental, we wouldn't have any problems financing it."
In the meantime, ARMS is "significantly delinquent" on a $4.8 million loan to purchase and prepare the land for development, said James Klein, the chief executive officer of the lender, Finance Fund, a Columbus-based nonprofit group that helps fund projects in low-income areas.
"Because of the nature of our funding, we have extended the workout period to give them every opportunity we possibly could.
"It was always our expectation when we moved into this project that it would go vertical, and at that point in time, with good, strong pre-leasing, it looked like it would do things that other condo projects have done, and then the bottom fell out."
Ibiza was to be a Short North landmark, the largest condominium project in the district: 135 units ranging from $159,999 for a one-bedroom, one-bath to $1,549,999 for a three-bedroom, four bath, two-story penthouse. It was to rise in two towers above ground-floor restaurants and shops.
Among the planned amenities were a roof-deck pool, concierge service, attached parking and a fitness center.
Brown said the exterior of the project will remain unchanged as an apartment complex, but the larger condos will be divided, giving the project about 155 apartments instead of 135 condos.
Brown said he hopes funding can be secured within 90 days for the apartment complex, with construction to begin soon after. He estimated the project would take 18 months to complete.
"Our goal is to convert it back to condos when the market comes around," he said.
Some buyers have expressed interest in renting an apartment in the building, Brown said. But others aren't sold.
"I absolutely do not want to live there in an apartment," Unterbrink said. "That is counterproductive to what I want to do, to purchase in a good neighborhood where my investment would grow."
Now, Unterbrink said she wants her money back, so she "can pick up the pieces and find a new dream."