By Susan Stabley | Staff Writer | 8/12/2011 | www.bizjournals.com/charlotte

Investors are snatching up large chunks of unsold condo units – typically in lender-brokered deals – as part of a trend that may herald a stabilization of a key segment of Charlotte’s real estate market.

In recent months, investors have bought remaining units at Conformity Corp.’s Southborough development, Crosland’s Tranquil Court and Pinnacle Properties’ Royal Court Condominiums and Legacy Village. Negotiations are said to be under way for leftover condos at The Garrison at Graham in uptown, which lender CommunityOne Bank took for $8.6 million in a foreclosure sale in February. And the investment team tied to the pending purchase of uptown’s EpiCentre holds the debt at the Rosewood condo complex that’s entangled in bankruptcy court.

Buyers looking for blocks of condos also have made “periodic calls” to the owner of uptown’s super-luxury The Vue Charlotte tower.

“We’re not entertaining that,” says Dan McLean, president and chief executive of Chicago-based MCl Cos., which bought and completed the 409-unit luxury tower in uptown. “I don’t know how serious they are, but people do approach us on occasion. We frankly just turn them down.”

But other developers are taking advantage of investors armed with cash. And it’s a move that can protect current condo owners at a troubled property.

Charlotte-based Succession Capital Partners recently took possession of Royal Court after buying its note from Regions Bank in December. Pinnacle completed the 107-unit condo  building off Morehead Street in mid-2009.

Jimmy Flowers, Succession Capital partner, says his firm’s next steps include working through bids from the broker community for handling sales. Last week, his team held its first meeting with the Royal Court’s homeowners association. About 50 residents attended.

Flowers says the first questions he’s asked by condo owners are: What’s your repricing strategy? How will this impact the equity I have in my home? ”This is not going to be a fire sale,’ he says. “I’m closing on three units this month. We continue to see good activity.”

The response to repriced units was stunning to investors Steve McLeod and Roy Goode, who bought a block of 48 units at the 69-unit Southborough condo project on South Boulevard last fall. My Townhome Realty sold the entire batch in nine months.

Average price cut on the units: about 30%.

Flowers hasn’t determined the degree of discounting at Royal Court yet, but he says it’s still a far better alternative for the owners than foreclosure. His group set aside healthy reserves and made sure there were no deferred maintenance issues at Royal Court.

“This can be a win-win for all parties, Flowers says. “If you got a healthy HOA and happy residents with the management group in place, that’s going to bode well for sales.”

Other projects in Charlotte have not fared as well because of recent foreclosure actions that have cost contracts and confused condo owners.

Terry Childers was once the exclusive sales agent for The Garrison at Graham, an 11-story, 41-unit project in Fourth Ward. The estimated $20 million condo project stalled in late 2007 because of problems with a private lender, but it was able to secure funds and finish in 2009.

“I closed 25% of the building and was still working on others, says Childers, who no longer handles sales for the property. “The loan had matured, but they continued to work with us. Suddenly, they did an about-face.”

CommunityOne took control of the property in a foreclosure sale in February after its developer defaulted on a principal loan balance of $10.7 million, according to court filings. “That wiped out 10 to 12 contracts, Childers says, adding that residents of the development have been “left in limbo” because they lack control of the homeowner’s association.

The situation is more complicated at Rosewood Condominiums, where the development’s holding company filed for Chapter 11 bankruptcy protection in Georgia in February. That means major financial decisions and any unit sales must be cleared by a federal judge.

Out of 137 condos about 50 remain unsold according to court documents.

Asset manager Geoffrey Curme and Doug Stephan – who snagged financial backing from the Baupost Group one of the country’s largest hedge funds to buy the EpiCentre’s development’s construction loan – also purchased the $23.8 million note for the Rosewood condos from Regions. But the bankruptcy process has blocked their ability to possess reprice and sell the remaining units.

“When you buy debt you still don’t have control’ Chuck Graham, principal at Newton Graham Consultants, says of the situation at Rosewood. “They still have to get control.”

Still, the recent activity sends positive signals, says David Furman, an architect and uptown condo developer behind local projects such as Trademark Courtside and Quarterside.

“Except for the news this past week, Furman says, referring to turmoil in the stock market, “it was starting to feel like Charlotte was getting its mojo back pretty well.”

He says fewer locals are worried about losing their jobs. That, combined with the new pricing on units, is driving a return to the market. “Folks are willing to commit if they feel like they are getting a good enough deal,” he says. “We’ve got to get that stuff sold and occupied. “

The biggest question when it comes to local condos is the future of The Vue, which rises 51 stories at the corner of West Fifth and North Pine streets. MCl bought it in 2007 from Churchill Development Group of Orlando, Fla., and Westminster Partners of lake Forest, IL.

To date only 17 units have closed out of 409 condos at The Vue, which was completed earlier this year.

“We expect it’s going to take a while, says Mclean, the MCl chief executive. “We’ve lowered some of our prices on our middle-price units, on 10 units. We’re doing exceptionally well on our expensive units.”

Mclean says more that half the units sold so far closed at more than $1 million. However, he acknowledges it may take three to five years to finish selling The Vue’s units.

Still, “there’s no reason” to convert to apartments, he adds. “The people that have the money see the value of The Vue. We plan to keep selling. We’re there for the long haul.”