Where Does Houston Real Estate’s Mosaic Go from Here?
The Federal Deposit Insurance Corporation (FDIC) has just taken over the famed downtown Houston condo Mosaic, along with several investors, including Starwood Capital Group.
As an intriguing part of Houston real estate, the Mosaic condos are luxurious and refined, and generally sell for about $300 per square foot. However, this stunning tower, which overlooks Hermann Park, has been seized by the FDIC after being foreclosed on by the lender.
FIDC and Investor Owned
All unsold units of this downtown Houston condo building are now the property of the FDIC and several investors, who agreed to purchase an interest in the lender’s assets. The lender’s assets include more than 100 properties across the nation, and are valued at more than $4.5 billion. Most of the properties owned by the lender are of the condominium variety, similar to the Mosaic.
Choice Condominiums is managing and selling the unsold condominiums of the Mosaic. The consortium, which consists of the FDIC and the investor group, is now in charge of determining the value of each unit and how it will move each property. However, because the property already has a substantial amount of cash, the investors won’t need to sell the properties for well below their appraised values.
In other words, don’t expect any condo liquidations to take place at the Mosaic.
Building Changes – What to Expect
It is reported that most of the residents of the Mosaic have not seen any changes to their building, even as the lender seized the property. Because of this, the Mosaic is still a highly sought-after downtown Houston condo building.
The 29-story Mosaic tower, however, still has its problems. Many of the residents of the building may have difficulty selling their homes, due to the fact that not many people want to buy into a foreclosed property.
David Regenbaum of Association Management, the property owner’ association management team, doesn’t see anything changing for the residents of the building. In fact, he sees a well-capitalized owner only making things better for the residents of the Mosaic.
He feels that the new owner will have the funding necessary to pay any deficits and assessments on the property, thereby solving many of the difficulties that the property has experienced over the last, several months.
What Happened?
As the real estate market began to tumble last year, many of the condo buildings throughout the country began to suffer, mainly because many of the nation’s lenders cut way back on condo lending. This, of course, led to vacant units that the building developers simply could not sell.
Because of the downward spiral of the downtown Houston condo market, Mosaic’s developer renamed the second tower and turned it into rental units.
Many saw the sheer size of the Mosaic as problematic, as there were nearly 800 units to be filled. As a result, the partnership failed and filed for Chapter 11 bankruptcy protection in January. At that time, the developer was in default on a $76 million construction loan.
Even though many hoped that the terms of the loan could be renegotiated, this downtown Houston condo property was eventually foreclosed on in September.
Now, the FDIC owns 60 percent of the property, and will provide zero percent financing to the investors for 50 percent of the purchase price of the property.
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