The crisp, clear autumn air recently felt in Boston
appropriately echoes the crisp,
clear sound of the auctioneer's gavel - perhaps
too much so for one struggling city
condominium development.

Two of the city's luxury condo developments
either recently or soon will face the
hammer - Fenway's Audubon Park development
held an auction this month, and
the Bryant Back Bay is scheduled for an early
November date with the auctioneer.

And brokers are increasingly worried that the
W Boston Hotel & Residences in the
Theater District may be next.



Since opening late last year, only 18 of the
building's 122 condo units had sold
through September, according to data
obtained from The Warren Group, publisher
of Banker & Tradesman. The last recorded
sale closed more than two months ago,
and no sales were recorded in September.


Though sales have been slow since the
beginning, the fact that the W's developers,
SW Boston Ventures, declared Chapter 11
Bankruptcy in April isn't helping matters.
In early May, bankruptcy court filings by
the developer listed 12 units as having
signed purchase and sale agreements
and awaiting closing. Only four of the units
named have closed since then - though
one buyer did back out of their original
agreement in order to purchase a larger
unit within the building.

While it's normally difficult to extricate
oneself from a purchase and sale
agreement,
the uncertainties created by the
developer's bankruptcy may provide
an avenue for
buyers to get out of their contracts,
observers said. Additionally, lenders are
scrutinizing the overall fiscal condition
of condo buildings much more closely than
in the past, according to Richard Vetstein,
a real estate lawyer and founder of the
Vetstein Law Group in Framingham.


"Anytime there's financial distress and
chaos, it might be time to renegotiate the
deal," Vetstein said.

Post-bankruptcy, two large units - one
on the 27th floor and one in the penthouse -
have sold for $2.2 million and $4.1 million,
respectively. But in the sub-million-dollar
price range, post-bankruptcy prices for
the sales that have occurred have been
considerably less than pre-bankruptcy prices.

Three units sold in December of last year -
pre-bankruptcy - for $710,000, $750,000
and $850,000. Similarly-sized units sold in
May - post-bankruptcy - went for
$600,000, $635,000, and $655,000. It is
not clear based on available data
whether and how interior fixtures may diffe
r among the units. All units examined
were on comparable floors.

If it was left to the lender's hands, the
properties might already be on the block.
Prudential Insurance Co. of America,
which owns the senior debt on the property,
has already filed a motion in court seeking
the right to foreclose, arguing the
developer's lack of sales means a timely
exit from bankruptcy is unlikely.

The property's fate may be decided as early
as next month, when the bankruptcy
court is scheduled to hold hearings on
Prudential's petition to foreclose. Prudential
did not return calls seeking comment.

Court filings reveal that the original loan
agreement between SW Boston Ventures
and Prudential required units be sold for
certain minimum sales prices. While in
bankruptcy, developers must seek
Prudential's permission to discount the units,
which the insurance giant has granted to
allow some of the post-Chapter 11 sales
to go through.

But it's not clear whether the already steep
cuts are deep enough, given the current
environment. Recent luxury auctions have
seen units go for an average of 70 percent
below the original asking price.

At this month's Audubon Park auction, units
sold for an average 72 percent of the
asking price, or a median price of $479 per
square foot, a far cry from the $712
median price per square foot the W units
have garnered post-bankruptcy.