Miami Condo Developer to Miami Condo Vulture?
December 26, 2007 by Lucas Lechuga
Much of the The Related Group's condo inventory is located in Brickell and Downtown Miami. Jorge Perez, CEO of The Related Group, recently stated on NBC6 that his only regret is not buying more land around his first condo development, One Miami. While many condo developers in Miami are now regretting ever getting into the mix, Jorge Perez regrets not buying and developing more land.
As the article points out, I think there will be a [huge] conflict of interest if Jorge Perez's fund acts to buy defaulted condos that arise at Related developments throughout Brickell and Downtown Miami. I don't think the banks that loaned the money to The Related Group will find the situation too appealing. I, for one, would feel a bit suckered. Additionally, buyers who do close on condos in Related developments might feel a bit suckered as well if they later hear that the developer himself acted as a principal to buy defaulted condos at much lower prices.
Thanks for the lead on the South Florida Business Journal article. I think the most important point is that the vulture funds need to control the board to have any hope of being cash flow positive on rental income. Is difficult to believe funds will hold cash flow negative units for appreciation.
It really contradicts the notion of an “arms-length transaction” , doesn’t it? Perez’s arrogance is striking…he is now trying to deflect attention from a mess for which he is largely responsible by putting a positive investment spin on the condo debacle by marketing a vulture fund. It is indeed comically absurd…and about as comical as when Huzienga cut him out of the Dolphins deal because he opened his big mouth to the media.
“I think there will be a [huge] conflict of interest if Jorge Perez’s fund acts to buy defaulted condos that arise at Related developments”
Exactly what I was thinking.
What kind of nut would give Jorge Perez money to buy condos–even if they’re not his own?
First of all, I would think it would be borderline criminal to allow him to use any of that money to bail out his own distressed properties.
Second, even if he is barred from using the money for any Related properties, he is still indirectly helping himself. First, it keeps the distressed inventory from hitting the market (which helps out his competing properties). Also, who is to say that he is paying a proper price for these condos? If I were Perez, I would want these condos to sell for as high a price as possible, so as not to drag down the values of all the other buildings (many of which he owns).
This has “conflict of interest” written all over it. The article says it’s not his money. Or at least, we can assume that most of it isn’t. Maybe he’s specifically seeking out Latin America because they won’t be able to read Lucas’s English-language blog about what’s really going on in this market.
Anyways, any investor that puts money into a condo “vulture fund” run by a guy whose interest it is to keep condo prices as high as possible, deserves to go broke. This is comically absurd.
Lucas, thanks for the insight. At TMP over 50% have already closed, which I think is pretty good consider closings only began this summer. I didn’t find anyone that purchased 15 units, maybe they haven’t all closed yet, but I did find many buyers that purchased multiple units. It’s an interesting project, very cosmopolitan.
Lucas, on an unrelated topic, are condo assessments and maintenance fees publicly disclosed anywhere, or is it a matter of contacting the association?
jorge perez is just trying to stabilize the market by jawboning. it happened in the 2000 tech bust. same thing, different market=didn’t work. he’s already deep in inventory…and prices STILL aren’t as such that there are such great bargains everywhere…still far from that happening. when the rent offsets carrying costs after a 20% deposit, then these condos will be worth buying…until then, it’s catching a falling knife – unless a unit is being purchased to be lived in…other than that, there still aren’t many deals out there.
Well if it does happen call it double whammy for the developer. Nice…made a crap load of money during the 02-05 boom and if he does buy the defaults with investment money and carrying costs by overseas investors he will land up getting paid in a few years once the dust clears and Miami is a new World Class city that will demand high prices. He’ll then sell off to those that want to live and pay a premium to live at these great projects. It’s a roll of the dice but I don’t see anything not to say downtown/brickell Miami is only moving forward in the next few years. The question is how many years??
Also, I agree if he buys it at original costs plus carrying costs then fine but buying at a deep discount is definitly a conflict and a discrace. But even then it’s foregin $$$ who’s to say no. In the end the big time players know what to do and the end user gets slapped in the face.
Perez,
I have had several investment groups contact me to tell me that they would only be interested in buying condos in bulk if they were able to hold a 51% stake in the condo development. So, I know what he’s getting at but I would be highly surprised if condo developers are turning away contract holders who are willing to close just to get to that 51% availability rate. But, who knows, maybe it’s happening.
I do know of one investment group that has purchased about 15 units at Ten Museum Park and has also purchased a few other units in other developments but I don’t know of any bulk buyers that have purchased anything in excess of 25 condos.
I can also tell you that there is a development in Miami that is shopping their units to bulk buyers. I haven’t disclosed this because I have several groups that are interested. I’m waiting for further details, including a confidentiality agreement that I can forward to interested parties. I’ll just tell you that it won’t be a surprise if you’ve been reading my “New Condo Closing Rates” posts for the past two months.
I see this is nothing but a publicity stunt to show the world that he is confident to support prices of HIS inventory. All Perez is doing is “pumping”.
If he were so interested in buying more land to develop downtown, now is his opportunity to buy up plenty of sites at bargain basement prices even compared to what he could have paid before—when he says he wish he bought it. It is cheaper NOW. Guess what??? He isn’t buying anything.
It says he is “considering” creating a fund….big deal. Is he spending his own money??? Investor money?? Is he actually DOING anything or just talking?
Don’t believe any of this. He is a master of marketing. Wait for some actions.
This article also has Peter Zalewski stating, “Unlike in 2007, a growing number of developers are now seeking to have contract holders default so they can unload the necessary proportion of units to vulture buyers”
Which developers on which projects are encouraging defaults? or marketing their developments to bulk buyers?
I keep hearing about these bulk buyers, could you or anyone provide an example in Miami recently where a bulk buyer has purchased multiple units at discount in a project where sales have stalled?
Now if his fund offers to buy back units in Related projects at original price + carrying cost I would say this is a great idea, and a sign that he is confident the market will rebound. In addition to being a bailout for anyone not willing to wait out the market. If below cost in his own pr0jects I would consider this as a conflict of interest.
Mr. Lechuga,
You write on your blog a slanderous comment against the integrety of Mr. Perez, and we hereby quote, “As the article points out, I think there will be a [huge] conflict of interest if Jorge Perez’s fund acts to buy defaulted condos that arise at Related developments throughout Brickell and Downtown Miami. I don’t think the banks that loaned the money to The Related Group will find the situation too appealing. I, for one, would feel a bit suckered. Additionally, buyers who do close on condos in Related developments might feel a bit suckered as well if they later hear that the developer himself acted as a principal to buy defaulted condos at much lower prices”
It is downright unprofessional for you to run down and trash the integrety of George Perez. We request immediately that you remove these damaging comments directed against Mr. Perez. and Related Group. You are exposing yourself and the real estate company you work for to a lawsuit. We might add that because you remove a slanderous comment without an apology and retraction, you are still libel for damages in a court of law. You are doing a disfavor to the real estate profession, and I would be concerned about your dimished reputation, among brokers, developers, and investors in Miami.
Blue Fig Investment Group,
I merely voiced my opinion on an article published by the South Florida Business Journal which I felt would be a topic of interest to my readers. I neither trashed “Jorge” Perez’s name nor his “integrity”.
In fact, I have often been criticized for being pro-Related Group and pro-Jorge Perez. His decision to create a fund to buy distressed condos may in fact be a very shrewd business move. It is my OPINION, as well as the opinion of many others, however, that this decision may present a conflict of interest.
Blue Fig Investment Group,
First, you look foolish when you address the subject of your posting by mis-spelling his name (its Jorge, not George). Secondly, Mr. Lechuga was merely stating his opinion, not facts, which is clearly highlighted by his subjective choice of words – “I think” and “In my opinion”. Lastly, know the law on libel before you make a ridicuolous posting. Do yourself a favor, research the additional element of actual malice needed to pursue a libel claim against an involuntary or voluntary public figure.
As for your posting Mr. Lechuga, Thank you for expressing your point of view.
Blue Fig Investment Group,
I agree. Totally ridiculous, actually sheer stupidity.
Dude it’s his opinion.! It’s called Freedom of Speech buddy.
In fact, I think if you read this blog Lucas has been very helpful and has given many other opinions on other Related projects and doings that are very good.
Basically, this is a blog and it’s for discussion. all Opinions are welcomed. I for one along with others welcome his opinion on that subject.
I meant I agree with “Funny post about libel ” not with Blue Fig Investment Group
The way the Related Group works is very efficient. I know ive been on the floor in a certain project.This fund he is opening is for sure a marketing tool that was developed 2 years ago.Do you honestly think Jorge Perez will loose? This is all very calculated and everyone involved is well informed of all legalities and ways to spin the seemingly never ending depreciation of the condo market in south florida
Here is information that will be helpful to all in understanding and useful to Lucas Lechuga in defending the Tibor Hollo lawsuit.
A bankrupt is any insolvent debtor; a person unable to satisfy any just claims made upon him or her; it’s also someone at the end of one’s resources. That’s what http://www.dictionay.com says.
Here are the facts: Tibor Hollo handed title to The Grand condo (then called The Venetia) over to the banks in lieu of foreclosure. The banks then sold the complex to Pierre Heafey ([email protected]) Google him and his buddy, Gino Falsetto ([email protected]) and you will find the facts and stumble over lots of surprises. Don’t be shocked. Another on/off /on buddy is Peter Carrier ([email protected]). The trio is soon embarking on expanding their condo vulture adventure.
Ask the condo unit owners what they think of Pierre Heafey’s control of the condo association. Also ask the condo-hotel unit owners at the Bentley Hotel and Hilton Bentley Beach in South Beach what they think of condo vultures. Heafey just got hold of $15,000,000 from Citigroup. That kind of money will buy a few distraught condos.
Evil + Apathy = Serfdom
My thoughts keep turning toward Tibor Hollo’s nonsensical, harassment-structured $25 million defamation lawsuit against Lucas Lechuga for telling the world about Mr. Hollo losing The Grand condo in Miami near the end of the 1980s. Mr. Hollo took the loss in stride, but opened a can of worms with the contents having grown into anacondas choking the living daylight out of hundreds of residential condo and condo-hotel unit owners.
First a preamble: My efforts to document the evil doings of the rogue condo “developers” Pierre Heafey and Gino Falsetto, issue warnings to the public, and help those at the mercy of the duo’s wrongdoings commenced when Pierre Heafey set foot in Miami upon buying The Grand from the banks that were given title to the complex by Tibor Hollo to avoid foreclosure and his lackey, Gino Falsetto, appeared on the scene shortly thereafter. That was nearly 20 years ago and my investigative research focused on the plight of the condo unit owners at The Grand Condos on the Bay. Our success was hampered, especially by condo unit owner apathy, but was marked by one major success. I researched and documented Pierre Heafey’s tax shelter project selling Grand condo units to Canadian investors, exposed his breaking U.S. laws, and proudly published in 1998 the results of my investigative reporting — Pierre Heafey plead guilty in Miami’s federal court and paid a $800,000 fine.
Then the Heafey-Falsetto duo got hold of the two condo-hotels in South Beach, The Bentley and The Hilton Bentley Beach. The result: the Bentley unit owners are suffering from the absolute control of and exploitation by the duo, with Falsetto truckling to Heafey. The gory details are published at http://www.GrandLifestyle.com.
So much for the preamble. Now on to my commentary
My efforts to expose the oppressive regime that calls itself “developer” has run into major flak and disappointing snags. As expected, the darts and worse are tossed by the Heafey-Falsetto duo, propelled by wishful thinking of silencing the inkwell that’s documenting and publishing the truth.
Lo and behold, the victims are upset. One should wonder. After all, cancer is neither treated nor cut out of one’s body by hiding the pest. But many Grand and Bentley condo owners do just that and prefer that no one rocks the boat. Driven by apathy and fear, they rather let the mistletoe work its parasitic function and wait for the customary kiss whenever the season calls for it.
Of course, there’s also the significant concern that “bad news” will drive the value of their investment into the ground. I’ve never heard of a farmer buying a cow that’s known to be infested with the mad cow disease. Though it is neither my responsibility nor my intent to worry about the fate of these sucker condo owners anymore, is everyone going to continue feeding the mistletoe? Apathy does carry a price: Evil + Apathy = Serfdom. The sad truth and my thoughts are clearly enunciated on my website, my blogs, and in my booklets, CONDO SERFS and Apathy Reigns (the booklets are available free-of-charge at http://www.GrandLifestyle.com).
I have been wondering more than once why Dr. Jonathan Easton, a unit owner at The Bentley, ever contacted me for help. Did he expect me to perform a miracle? I do sleep soundly knowing I never represented myself as a miracle worker and never issued the promise to turn water into wine. I did, however, relinquish my peace-of-mind lifestyle and agreed a year ago to republish all I had previously published that related to The Grand for the purpose of helping the sufferers at The Bentley luxury hotel. Now everyone, it appears, wants the Bentley ugliness hidden from view. It’s more, much more, than simple selfishness or embarrassment, I surmise; it does give cause for scholarly debate.
Manumission won’t come as a gift like the ones Santa Claus drops down the chimney.
Interesting, is this related to the number of foreclosures and actions by the Bentley Beach association against unit owners?
Yes.
jorge perez is WELL RESPECTED developer in the MIAMI area also banks would through money at jorge whether you know it or now. also if any developer there needs financing on 100 units or more as long as they rent them as apartments for 5 years or more i’ll finance them today. i’ll even finance jorge if he wants the cash 5million up no max.