Miami Condo Developer to Miami Condo Vulture?

December 26, 2007 by Lucas Lechuga

Earlier today, the South Florida Business Journal published an article entitled “Related Considering Fund to Buy-up Condos“. It reveals that Miami condo developer, Jorge Perez, is considering to create a fund to buy condos throughout Miami at a discount. The article states that a source disclosed that the funding would come from Latin America.

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.

Suckered into loaning on and buying Miami Condos

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22 Comments on "Miami Condo Developer to Miami Condo Vulture?"


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Anonymous
8 years 8 months ago

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.

Anonymous
Steve
8 years 8 months ago
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… Read more »
Anonymous
Perez
8 years 8 months ago

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?

Anonymous
RA
8 years 8 months ago
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… Read more »
Anonymous
8 years 8 months ago
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… Read more »
Anonymous
Perez
8 years 8 months ago

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?

Anonymous
cyrus
8 years 8 months ago

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.

Anonymous
BFG
8 years 8 months ago
“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… Read more »
Anonymous
Drew
8 years 8 months ago

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.

Anonymous
8 years 8 months ago

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.

Anonymous
Blue Fig Investor Group
8 years 8 months ago
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… Read more »
Anonymous
8 years 8 months ago

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.

Anonymous
Funny post about libel
8 years 8 months ago
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… Read more »
Anonymous
CA
8 years 8 months ago

Blue Fig Investment Group,

I agree. Totally ridiculous, actually sheer stupidity.

Anonymous
RA
8 years 8 months ago

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.

Anonymous
CA
8 years 8 months ago

I meant I agree with “Funny post about libel ” not with Blue Fig Investment Group

Anonymous
Leo V.
8 years 8 months ago

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

Anonymous
heidi
8 years 7 months ago
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 (pheafey@groupeheafey.com) Google him and his buddy, Gino Falsetto (gino@ariesdevelopmentgroup.com) and you will find… Read more »
Anonymous
8 years 7 months ago
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… Read more »
Anonymous
Perez
8 years 7 months ago

Interesting, is this related to the number of foreclosures and actions by the Bentley Beach association against unit owners?

Anonymous
8 years 7 months ago

Yes.

Anonymous
oneal
7 years 6 months ago

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.

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