ST Residential ‘Pleased’ With Town Square Condos, Looks Toward ‘Public Launch’

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by Ralph Nichols

Mark Twain famously once remarked, in response to an obviously erroneous news story, that “reports of my death have been greatly exaggerated.”

More recently, an announcement that ST Residential would begin marketing and selling housing units in the Town Square condo/retail complex it has owned since late October was modestly exaggerated.

The reality is that determining what asking prices for these condos should be – balancing the interests of ST Residential and prospective buyers – given current market conditions is akin to shooting at a moving target while blindfolded.

And Aug. 1 turned out to be too soon for this mega condo seller to pencil out numbers that work. “I’m still not convinced the [real estate] market is settled today,” David Ploger, first vice president of ST Residential, told Burien City Council members Aug. 15.

But ST Residential is looking toward a public launch of condo sales, “although I can’t guarantee it will happen yet this year,” Ploger added. Still, he voiced confidence in their product and the marketability of the condos.

No mention was made of the building’s 20,000 square feet of vacant retail space on the ground floor, nor did council members inquire about it.

The Town Square condominiums are one of three such properties “we hope to bring to market yet this year,” Ploger said. “I’m very pleased with it…. We’ve concluded over and over that Burien Town Square should be what it was intended to be – owner-occupied units.”

Noting he’s “very pleased with it,” Ploger described the 118 unsold uits as “very efficient. The floor plans are state of the art. I’ve looked around and I’m not aware of a better condominium complex in the South Seattle area.”

About 40 prospective buyers signed contracts and made deposits on units while the property was still owned by Urban Partners. ST Residential reportedly is contacting these buyers individually with modified terms.

Ploger said sales prices established by ST Residential will be “fair to us and give value to the owners.” Those prices are expected to be “more than 35 percent below the original prices” when the seven-story complex opened over two years ago.

In July, new prices for the Town Square condo were placed at approximately $120,000 to $420,000, compared to the original $200,000 to almost $700,000.

Six condos were sold before sales were placed on hold when the Federal Deposit Insurance Corporation (FDIC) closed Corus Bank of Chicago in September 2009.

Corus Bank had financed construction of the building with a $38.5 million loan in 2007 to Urban Partners, the city’s partner as developer of the private components of the still-unfinished Town Square project.

The nation’s housing market began to collapse a year later, eight months before the condo/retail complex opened along with the Burien Library/City Hall building and Town Square Park.

After the FDIC seized the bank’s assets, including Urban Partners’ loan, ST Residential became holder of its residential construction loan portfolio.

ST Residential is comprised of the FDIC, which holds a 60 percent share of that portfolio, and Starwood Capital Group and four other several private investors.

Urban Partners eventually transferred ownership of the condo/retail complex – avoiding a trustee’s sale of this property, which was in foreclosure – to ST Residential. The FDIC earlier had rejected an offer by Urban Partners to buy back its construction loan.

Urban Partners still owns undeveloped parcels within the Town Square area north of both the library/city hall building and the condo/retail complex. It has yet to announce plans for the second phase of private development there.

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