And cheap. He notes Frederica Massiah-Jackson, presiding judge of Philadelphia's Court of Common Pleas, bought a unit in the tower for $330,000 last year, less than half the initial asking price for units in the complex. "You think Ira Lubert has this good a view? Or my friend Tom Kline?"
Five years ago it was investment moguls like Lubert, senior law partners like Kline, corporate bosses, and the occasional celebrity athlete and rock star who were grabbing the multimillion-dollar condos in Center City.
Now that prices have crashed, the fact Philadelphia judges can afford to live in places designed for people like the law partners who fund Pennsylvania judicial campaigns is a kind of recession democracy, though it doesn't extend to most of their constituents.
"I may buy 10 of these" Waterfront Square condos, Herdelin told me, provoking a broad smile from veteran sales rep Debbie Centofanti.
He flashed me his Beneficial Bank deposit statement, which has so many digits that, if he closed his account today, his local branch manager would have some explaining to do.
Herdelin says he recently sold a home in Loveladies, where the neighbors included the people who run Comcast Corp. and used to run Commerce Bank, for $15 million. He's looking for buyers for another sand castle, in Avalon, for nearly $12 million.
The lead mortgage holder on Waterfront Square's south tower, Ullico (Union Labor Life Insurance Co.), last month hired developer David Grasso to revive sales. The complex is home to the Eagles' Mike Vick and Sixer star Thaddeus Young, but in the south tower 115 of 176 units remain unsold.
Grasso was Ullico's alternative to foreclosing the reportedly more than $70 million owed on the property by its original developer, Israel-based Isle of Capri. "I offered Ullico $35 million," but they hired Grasso instead, Herdelin says.
A lot of big properties have been changing hands or renegotiating loan terms around Philadelphia since prices tumbled and debt loads started outstripping property values.
Granite Run Mall, Penn Mutual Towers, 1900 Market Street, Seven and Ten Penn Center, the Public Ledger- Curtis Center complex, and Conshohocken's Four Falls center are among dozens of Philadelphia-area office buildings that have been in various stages of lender "non-performing" status over the past year, according to data from New York-based Trepp L.L.C.
In Philadelphia, like most of the rest of the nation (outside New York, which is building again), the real estate bubble of the mid-2000s didn't collapse all at once. It stalled, and now properties are dropping into the market, not all at once, but in clusters, as lenders fall behind on payments because of falling rents, vacancies rise, valuations fall below debt levels, and balloon payments come due.
Call it a soft landing; but the result is, there's so much property that keeps coming onto the market, it doesn't pay to build a lot of new ones, Grasso told me. "It causes a lag in the recovery," he added. "There won't be a flood. It's more of a trickle."
'Swaps' gone wild
My colleagues Sue Snyder, Paul Nussbaum, and others have written about millions in losses by local-government borrowers under interest-rate "swaps" contracts purchased after 2003, when then-Gov. Rendell signed a Wall Street-backed bill that made such deals legal for municipal borrowers.
The contracts were supposed to enable borrowers to get low-interest tax-free bond rates even if national interest rates rose. But when interest rates stayed low, instead of rising, the contracts lost value. Under terms of the deals, the city then had to pay fees to its banks, instead of the other way around.
How much? "The city and school district have lost more than $331 million in net interest payments and cancellation fees relating to swaps negotiated with federally bailed-out financial institutions such as Wells Fargo, Morgan Stanley, and Goldman Sachs," and could have to pay an additional $240 million in the future, Sharon Ward, director of the Pennsylvania Budget and Policy Center, wrote in a report to be officially released this week.
The loss estimates "sound high," Philadelphia city treasurer Nancy Winkler told me. She said the city saved some money because the swaps enabled it to borrow more cheaply, for a time. She said there had been no new swap deals since Michael Nutter was elected mayor.
While state auditor general Jack Wagner has called on cities to stop making swap deals, Winkler says they're sometimes appropriate to hedge borrowing risk.
But future deals should allow the city to exit the swaps a lot more cheaply than the contracts the city signed from 2003 to 2008, reducing the risk next time interest rates move the wrong way, she added.
Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD on Twitter.