BankUnited Blacklists Las Vegas Condominiums

I came across this article concerning an internal memo at BankUnited that was released about the list of Condominiums that BankUnited will not lend money on. The list was for 191 condominiums and while the majority of them were in Miami, some Las Vegas condominium communities did make the list.

For the list of Las Vegas condominium communities, the biggest reason for the decision to not lend money for certain condominium communities was due to “High Investor Concentration”. You can view the list of Blacklisted Condominiums here. 

BankUnited spokeswoman Melissa Gracey said the list is based a similar guidelines used by Fannie Mae and Freddie Mac.

According to the opinion of Michael Shedlock with Seeking Alpha:

The key point of this mess, not even mentioned in the article, is the domino effect. Anyone who purchased a unit and has closed on it is now trapped. There is no one to sell to because no financing is available.

By publicly posting the exclusion list, other lenders are sure to follow suit. It will become difficult if not impossible to purchase a unit in any of those 119 projects. The implication is a substantial number of those projects will fail. Whatever banks financed those towers are going to end up owning them.

Those who have a placed a down payment on a unit but have not yet closed may wish to seek legal advice to see if the shutdown of bank financing is somehow material to the purchase agreement. Some no doubt will simply decide to walk away regardless of the answer.

Bank United just started a domino effect. The dominoes will keep falling until they reach the banks lending money to these projects. Undercapitalized banks funding these projects are likely to fail.

Here are the Las Vegas Condominiums on BankUnited’s Will not lend list with the reason:

• Allure Condos – High Investor Concentration
• District at Green Valley – High Investor Concentration
• Manhattan Condos – High Investor Concentration
• Meridian at Hughes Center – BKU Exposure
• Newport Lofts – High Investor Concentration
• One QueensRidge Place – High Investor Concentration
• Panorama Towers – High Investment Concentration
• Park Avenue Condos – High Investment Concentration
• Regency Towers – High Investment Concentration
• Sky Las Vegas – High Investment Concentration
• Soho Lofts – High Investment Concentration
• Turnberry Place – High Investment Concentration
• Turnberry Towers -High Investment Concentration

Now, the big difference between the list of Miami Condominiums and Las Vegas condominiums is that the Miami Condominiums have “declining market value” as the reason. But, if other lenders join the bandwagon and stop lending for these same Las Vegas Luxury Condominiums, the effects of what could happen is obvious.

Will other banks follow suit? Time will tell and it’s really going to depend on people purchasing in the above units with the actual intention of living there to bring down the investment owner percentages. As evidenced by the Turnberry Tower Resale report, there is a lot of inventory being put back on the resale market by the “investors” and we are already seeing prices below what the owners paid for them brand new.

Paul Francis, ABR,CRS | Coldwell Banker Premier | Las Vegas Real Estate | 702.592.3058