Lender for Allure Waikiki may be in trouble

Corus Bank, the Chicago bank that made the $169 Million loan to Chicago developer Fifield Co. to build the Allure Waikiki, may be collapsing under its weight of it defaulting commercial real estate loans.  Corus Bank filed an 8-K filing with the Securities and Exchange Commission (SEC) today that showed a preliminary Tier 1 capital of negative $157 million with a ratio of (2.1)%.  The Bank is considered critically under capitalized at this point.  Under the Federal Deposit Insurance Act any depository institution that is deemed “critically under capitalized” must be placed in conservator ship or receivership within 90 days.  Corus also stated in the filing that it is “highly unlikely that it will be able to obtain additional outside capital…”

Unlike other developers, Fifield does not appear to be in financial trouble itself desite sluggish sales at the Allure Waikiki. They have even taken the aggressive step of opening a sales office in Tokyo this past October to help increase sales. But, with Corus on the verge of collapse, this means schedule payouts for the ongoing construction could be seriously delayed and there is a chance future payments will not be made. This leaves Fifield in a bind to come up with payments for their contractors.

This may all mean more layoffs from this project at a time when Hawaii’s unemployment rate is steadily rising with construction being one of the areas hardest hit in the state. This past June the unemployment rate is already up to 8.1% and the new figures for July will be released August 7, 2009.

The Allure Waikiki is scheduled to be completed in 2010.