A 2012 photo of the Brickell skyline taken from the Rickenbacker Causeway (Credit: Daniel Christensen)

The number of South Florida homeowners who have mortgages larger than their home’s value is shrinking, thanks in part to rising home prices across the board.

Data from a year-end RealtyTrac report shows that about 19.6 percent of all South Florida homes with a mortgage were underwater. That equates to 296,838 properties spread throughout Broward, Palm Beach and Miami-Dade counties — a 2.3 percentage point decrease from the third quarter of 2015.

South Florida homeowners were stuck with upside-down loans when the real estate market crashed in the late 2000s. Their home values tanked, leaving them with loan balances higher than their properties were worth.

Then in 2013 and 2014, home prices shot upward as the housing market picked up speed. Now, South Florida ranks 14th in the nation for underwater homes.

The country’s worst hot spot was Las Vegas, where 159,832 homes — or about 27.7 percent of all the region’s residential properties — are seriously underwater.

“Over the past three and a half years, the number of seriously underwater properties has been cut in half, but we continue to deal with a long tail of seriously underwater properties, and it will likely be another five years at least before most of those remaining underwater properties move into positive equity territory,” Daren Blomquist, RealtyTrac’s vice president, wrote in the report. “At the other end of the spectrum, the growing number of equity rich properties reflects a moribund move-up market and restrained leveraging of home equity by U.S. homeowners.” — Sean Stewart-Muniz

Renderings of the proposed Palm Beach County baseball stadium

Chicago Cubs legend Ernie Banks was famous for saying “let’s play two.” And in Palm Beach County baseball fans can soon say “let’s watch two”— watch spring training games at two separate sites that is.

Construction has begun on a new stadium complex that will sit on 160 acres on Haverhill Road south of 45th Street in West Palm Beach. The $135 million complex is scheduled to be ready for the opening of spring training in 2017 and will host the Houston Astros and Washington Nationals. The Miami Marlins and St. Louis Cardinals already hold their spring training at Roger Dean Stadium in Jupiter.

Most local real estate professionals express strong support for the project, although the question remains whether the economic impact will be strong enough to justify the $135 million that the county is devoting to the project.

“This is absolutely fantastic for the area,” Rebel Cook, president of Rebel Cook Real Estate, which is brokering the sale of warehouse condos across the street from the stadium, told The Real Deal. “Forty-fifth Street is a main corridor, just west of I-95 and also close to the Turnpike.” That area and the neighborhoods south of it have been down on their heels for the last 15 years.

As for the stadium, it is being financed largely with bonds backed by $108 million of county taxes on hotels and motels (bed taxes) slated for the next 30 years. The teams will pay $68.8 million combined in average lease payments of $2.4 million a year that will help service the debt.

The stadium will generate total economic impact of more than $158 million for West Palm Beach, according to Tourism Economics, a subsidiary of economic research firm Oxford Economics. It estimates the project will generate $58 million in total personal income and more than 1,200 annualized full-time equivalent jobs. The project will proved $6 million in state and local taxes, the economists calculate.

“This is helping a distressed area become way better,” Bill Reichel, president of West Palm-based commercial real estate services firm Reichel Realty, told TRD. “It will drive traffic, which will help retail, which will help housing.” He noted that the Jupiter baseball complex has added vibrancy to its Abacoa neighborhood. And even the skeptics acknowledge that the new stadium will at least draw fans from the Washington, D.C. area, though attracting fans from Houston may be a tougher sell, given the long distance.

Reichel is particularly enthusiastic over the impact on jobs. “It’s going to help everyone from ticket takers, to hot dog vendors to people in the construction trades,” he said.

Bay Harbor Islands apartment building and Congress Group president Dean Stratouly

After closing on a 12-unit condo in Bay Harbor Islands in December, Boston-based Congress Group has purchased the waterfront property down the street for $9 million. 

Miami-Dade County records show that a Congress Group affiliate, Congress Driftwood LLC, on Monday bought the 16-unit, two-story apartment building at 9955 East Bay Harbor Drive. It’s near two Art and Tec Development projects currently under construction: Harbour Park, a waterfront condo building, and 9900 Bay Harbor Townhomes.

Bay Harbor Islands is in the midst of substantial redevelopment, with at least 26 projects underway in the community of nearly 5,900 residents, located in the barrier island area of Northeast Miami-Dade County. Projects include Bay Harbor One and Verzasca Group’s Pearl House and Le Jardin.

The apartment building that sold was built in 1957 and sits on a 22,500-square-foot site. Bruder Enterprises Inc. was the seller. According to county records, Bruder paid $960,000 for the apartments in 1995. Genia Bruder, president, signed the deed.

If sold for the land, the property traded for $400 per square foot. Congress financed the sale with an $8.86 million mortgage. Revere High Yield Fund is the lender, records show.

A Congress affiliate paid $5.52 million for a boutique condo on the northern end of the island at 10301 East Bay Harbor Drive in December. A broker involved in the sale told The Real Deal at the time that Congress plans to redevelop that property. The developer declined to comment on plans for the land. That site is next to the Bay Harbor Continental, where the Miami-Dade County Commission ruled in favor of a developer to rescind historic designation status of the 35-unit co-op.

Congress Group, has acquired, developed, repositioned or managed more than 7 million square feet of real estate valued at more than $1.5 billion, according to its website.

Construction cranes

South Florida contractors received many fewer checks in the mail by the end of 2015, closing out a year that began with a veritable building boom.

Developers sank $10.335 billion into construction contracts by the end of December — a 3 percent increase from the total $10.036 billion spent in 2014, according to a new report from Dodge Data & Analytics.

The region was on track to outpace 2014 spending in a big way during the first half of 2015, but slowing residential sales in the fall and winter months hamstrung construction.

On a year-over-year basis, some months reported as much as 60 percent reductions in the amount of money flowing into residential building contracts.

Non-residential contracts — everything from hotels to government buildings — mostly held steady or rose during the final months of 2015. But the majority of South Florida’s development dollars flowed to single-family homes, apartments and condos, so spending in the market’s non-residential sector wasn’t enough to pull up the year’s total.

December was the final footnote: $614 million worth of residential contracts were signed that month, a 5 percent drop compared to 2014. Meanwhile, non-residential contracts hit nearly $739 million — swelling by 11 percent year-over-year. — Sean Stewart-Muniz

The nearly 21-acre marine facility on the Miami River

Five months after paying $35.5 million to purchase the former Bertram Yacht headquarters on the Miami River, the property’s new ownership has reportedly been hit with a $16 million foreclosure suit from its lender.

Birch Commercial Mortgage filed the suit this week against Interterra Investments Group, headed by Argentinian architect Jorge Bernstein, according to the South Florida Business Journal.

Interterra had financed its purchase of the nearly 21-acre marine property in August with a $16 million loan from Birch. The lender is actually an affiliate of Alecta Real Estate Investment, which sold the property in that deal.

Interterra is close to obtaining more financing and has already received commitments from two new lenders, according to the South Florida Business Journal. The owner hopes to resolve this suit within the next month.

Bernstein, who has a home on Fisher Island, plans to redevelop the property into a mixed-use project — though details on what he plans to build are in flux.

The property was once the home of boatbuilding firm Bertram Yacht, which first constructed the Miami River facility in the 1960’s. The company moved to a facility on Merritt Island in 2014. [South Florida Business Journal] — Sean Stewart-Muniz

Renderings of the Fordham and Elysian and a view of Deerfield Beach

Deerfield Beach, a quaint oceanfront city near the Broward-Palm Beach county line, has always been known for its laid-back California surfer vibes, where mansion seekers could find less expensive estates than in Boca Raton.

Now, Deerfield Beach is slowly emerging from the shadow of its more posh neighbor to the north.

A map of Deerfield Beach

The past two years have breathed a glamorous dose of growth into Deerfield with the opening of the only Relais & Châteaux hotel, which caters to the Hollywood set, a slew of new restaurants and retail shops targeted at affluent crowds, and new investment by developers looking to capture a share of the boutique luxury condo market.

Ignacio Diaz, co-owner and director of Group P6, which is developing two buildings with a total of 16 units, said Deerfield Beach has tremendous potential. “There are very few places in Florida so close to the beach that is not over-developed,” Diaz said. “Because the city restricts building heights, Deerfield Beach doesn’t have huge high rises or monster developments.”

As a result, developers focus on offering smaller, yet equally luxurious, condo buildings like those found in Sunny Isles Beach, Miami Beach, and other oceanfront cities, Diaz said. “The price per square foot is a great deal for end-users,” he added. “That is what attracts and appeals to buyers about Deerfield Beach.”

On the commercial side, Deerfield Beach experienced a flurry of trades in 2015 that illustrates the bullish nature of investors in the city. This past April, the Shoppes of Hillsboro, at 2201-2260 West Hillsboro Boulevard, sold for $10.5 million to a partnership between BREF Hillsboro and Dhanya of Miami. The sellers, Kenneth Israel Shoppes of Hillsboro LLC, paid $9 million for the 61,165 square-foot retail center in 2005. The tenant mix includes medical, financial, clerical and food service businesses, and sundry retail and services.

A month later, a 2.1-acre property at 1335 South Federal Highway that was the former site of Nielsen’s Furniture sold for $3.1 million. The buyer, Federal and 13th LLC, plans to redevelop the property as a gas station and convenience store. An adjacent building at 1307 South Federal Highway will be leased to office and retail tenants.

In November, Fairlead Commercial Real Estate purchased a Class A office property at 800 Fairway Drive for $21 million from American General Life Insurance Company. And last month, Publix bought the Hillsboro Square shopping center for $45 million, paying $287 per square foot. The previous owner, DDR paid $19.2 million for the 13.7-acre property in 2002.

Signs of change

Hollywood Edward Walson ushered in a new era for Deerfield Beach when he opened the Royal Blues Hotel & Chanson Restaurant at 45 Northeast 21st Avenue in December 2014. His star-studded clientele includes Oscar-winning director Woody Allen, daytime soap opera queen Susan Lucci and Cuban American actor Sandy Garcia.

Further cementing Royal Blues’ high-flying status is Walson’s partnership with Relais & Chateaux, the exclusive French luxury boutique hotel and restaurant brand. Room rates range from $415 to $1,150 a night, prices previously unseen in Deerfield.

In November, Oceans 234 at 234 North Ocean Boulevard reopened after undergoing a $1.5 million renovation that now provides floor-to-ceiling glass views of the Atlantic. The private dining area was also expanded, going from 20-seat capacity to nearly 50. The menu was also revamped to include adventurous dishes like lobster-stuffed potato skins with creamed spinach, bacon, Vermont white cheddar, and truffle salt.

Earlier this month, city commissioners approved a redevelopment plan for the city’s old downtown. The newly named “Pioneer Grove” will take up 119 acres between the Hillsboro Canal and Southeast Seventh Street, to the north and south, and between Dixie Highway and Sixth Avenue to the east and west. The land use changes encourage commercial and residential development, while limiting industrial uses. For instance, the new rules would allow developers to build double the commercial space, while increasing the number of residential units from the current 128 to 2,150 units.

The city would also allow buildings to reach up to five or six stories on the north side of Hillsboro Boulevard and four or five stories on the south side of the main thoroughfare.

Transportation

Deerfield Beach has a free community bus service that operates only on weekdays from 8 a.m. to 4 p.m. The first route runs east to west, beginning near Dixie Highway and Hillsboro Boulevard and ending at the Deerfield Mall at 3668 West Hillsboro Boulevard. The second route runs from north to south, beginning near Dixie Highway and Hillsboro Boulevard and ending at Broward Health North at 201 Sample Road. Both routes offer connections to Tri-Rail and Broward County Transit buses.

The city’s main artery is Hillsboro Boulevard, connecting motorists to the Florida Turnpike, I-96 and Dixie Highway.

Most expensive residential sale

Single-family: The Cove, a 6,283-square-foot home with six bedrooms and seven bathrooms, that sold for $2.3 million
Condominium: Unit 307 at 701 Southeast 21st Street, a 2,380-square-foot unit with three bedrooms and three bathrooms, for $1 million

Residential broker’s take

“People love Deerfield Beach for its close proximity to the beach, the retail and the restaurants, and obviously its charm. It has very good price points and is centrally located between West Palm Beach and Fort Lauderdale. Unfortunately, we don’t have more inventory out there because people are so interested in Deerfield Beach,” said Vickie Arcuri of EWM Realty International.

Commercial take

“Deerfield Beach is enjoying a strong surge of interest. It’s a slightly less expensive alternative to Boca Raton. You also have a tremendous amount of density that is attracting new commercial development that is going to be a huge economic boon to the area,” Marcus & Millichap’s Doug Mandel said.

Demographic changes from 2000 to 2015

Population: 78,041, up 20% from 2000

Median age: 43

Median income: $63,639, a 33% increase from 2012 and a 46% increase from 2000

Average household net worth: $389,453

Price trends

Median sales price per square foot: $169, 12 percent higher than the rest of Broward County

Increase in average rent over the last year: 22% for a one-bedroom to $1,388; 25% for a two-bedroom to $1,875

Most expensive home on the market: 1653 Southeast Sixth Street, four bedroom and four bathroom house, asking $2.4 million.

Least expensive home on the market: 265 Southeast Tenth Street, unit 1C, two bedroom and two bathroom condo, asking $62,000

New development

On the residential side, Group P6 is developing the Elysian and the Fordham, which have seven units and nine units, respectively. Both buildings feature floor plans ranging from 1,200 to 1,750 square feet and amenities include porcelain and marble flooring, panoramic impact glass windows, designer fixtures for all bathrooms and kitchens with luxury Italian cabinetry.

Diaz said his company expects to complete both buildings sometime between December 2016 and February 2017. “We only have six units left,” Diaz said. “All our buyers are domestic, mostly from the northeastern U.S.”

As far as commercial development, the Bristol Group and Butters Construction and Development are planning a 925,000-square-foot business park on the site of the former Deerfield Country Club, which is located east of I-95 and north of West Hillsboro Boulevard. According to the developers, the park will entail a hotel, warehouse and offices, along with a recreation building and a public park during the project’s first phase.

The first two industrial buildings of the project, which is called Hillsboro Technology Center, is expected to be completed this year.

Rendering of Collection Residences, Ugo Colombo and Masoud Shojaee

Masoud Shojaee and Ugo Colombo’s split over the development of Collection Residences in Coral Gables has just gotten much more heated, with Shojaee filing a lawsuit alleging breach of contract, among other counts.

Shoma Coral Gables filed the 114-page suit in Miami-Dade County Circuit Court on Wednesday against Gables Investment Holdings LLC; Colombo, individually; and the Collection, Colombo’s Coral Gables car dealership.

In November, following a major falling out, Shojaee and Colombo pulled out of their joint venture to develop the Collection Residences, a planned mixed-use project with 128 condo units in Coral Gables, across the street from the Collection.

The suit points to much deeper underlying problems, alleging that after Shoma “refused to capitulate to improper demands of CMC and Colombo, after having invested millions of dollars in the future project, Colombo and his company, CMC Group, proceeded to sabotage the entire project, causing substantial damages to Shoma.”

Colombo issued a statement through a spokesperson: “This is a frivolous lawsuit filed by a peculiar fellow.” 

The suit centers around retail space and parking spaces for the Collection. It outlines Shojaee and Colombo’s business relationship dating back to 2013 when they decided to develop Collection Residences. The suit says they paid $27 million for the property plus a $1 million bonus upon execution of a sale or lease of underground parking spaces to the Collection, plus 10 percent of the gross rental income from any lease or the sales price for the purchase of any underground parking.

According to the suit, the Collection’s revenue exceeded $500 million in 2014, up from $50 million in 1994, and to meet its needs for additional retail and parking space for cars, CMC and Colombo allegedly attempted to use their relationship with Shoma “to unfairly enrich themselves and the Collection at Shoma’s expense by acquiring underground garage space for the cost of construction and without payment for the land or profit.”

The suit alleges that the Collection has been storing vehicles on the property, without paying rent, and refuses to move them.

Shojaee declined to comment on the suit, but his attorney, Andrew Hall, told The Real Deal: “This lawsuit is going to hold Mr. Colombo and his interests responsible for attempting to exploit a joint venture to his own benefit, to the harm of his partner,” said Hall, founder of Hall, Lamb & Hall, who represents Shoma along with Matthew Leto and Frank Silva. “The Collection was going to expand and shift the costs of the expansion to Shoma. We all know what that means, and as a result a project that should have been phenomenally successful failed. It’s now time for accountability.”

In September 2015, CMC and Colombo asked Shoma to agree that the Collection would pay $14.25 million for 26,500 square feet of prime retail space and $3.16 million for the basement garage area, the suit says. Shoma countered with $18.55 million for the retail space and $5.48 million for the basement garage. The suit then describes a standoff and the alleged sabotage of the joint venture development.

“Ugo Colombo and I will no longer be pursuing a joint venture to develop The Collection Residences,” Shojaee, president and chairman of Shoma Group said in a statement in November. “… At this point, it was simply a matter of terminating our relationship to co-develop the project.”

Jason Giller, an attorney for Colombo’s Gables Investment Holdings responded to the suit: “A few months ago, Mr. Shojaee announced that he was ‘dropping’ the project. It now seems that he suffers from dropper’s remorse,” Giller said in a statement. “It is nonsense for Shoma to seek injunctive relief to remove a few cars from a warehouse leased and paid for by The Collection. Shoma is not the owner of any of this property.”

Colombo, had told TRD in November that he still plans to build the Coral Gables project — eventually. The land, which his firm owns together with Shojaee’s Shoma Group, is not for sale, he said.

“The project is not dead, because it was never alive,” Colombo told TRD in an interview at a November Urban Land Institute conference in Miami.

“We’re putting every effort now in [Brickell] Flatiron, and we’re about to break ground,” he said. Once that project has progressed, he will turn his focus to the Collection Residences, he said.

Yet according to the suit, Colombo had already told Shojaee that the project was not going forward and closed the sales office and canceled marketing events for the project. He also discharged Realtors that had been hired to market and sell the project, all “in retaliation for Shoma’s refusal to capitulate to CMC and Colombo’s improper demands,” according to suit.

In addition to breach of contract, the suit alleges breach of fiduciary duty, breach of implied covenant of good faith and fair dealing, interference with contract, and interference with prospective economic advantage.

The Collection Residences’ 2.8-acre site, which includes 4101 Salzedo Street and 4112 Aurora Street, was acquired by Coral Gables Luxury Holdings, a company owned and managed by the former joint venture partnership. The site currently includes two office buildings, a small amount of warehouse space and parking lots.

Coral Gables Luxury had originally filed development plans with the city to build 270 high-end residences and about 40,000 square feet of ground-floor retail space. Arquitectonica was hired to design the mixed-use development.

The Collection Residences marks the second project within a year linked to Colombo that is not moving forward as planned.

In May, Colombo and his partners put an assemblage of parcels at 830 Southeast First Avenue in Miami on the market. The 0.8-acre property, marketed as 830 Brickell, across from the planned Brickell City Centre, includes development rights and plans. A second Brickell Flatiron tower was originally planned for the site.

Tony James

From the New York website: The Blackstone Group saw its profits shrink by 70 percent in the fourth quarter amid weak stock markets. The alternative asset manager, whose real estate funds collectively were the biggest investor in New York City real estate in 2015, also took a hit on its stake in the Hilton hotel chain.

Blackstone’s economic net income fell from $1.45 billion to $435.7 million, or from 44 cents to 37 cents a share. Analysts had expected profits to stay flat at 44 cents per share.

Weak stock markets are partly to blame, as share prices influence the fund manager’s net economic income. Blackstone’s credit arm GSO Capital Partners, meanwhile, was hit hard by falling oil prices and saw its profits shrink by 87 percent. Blackstone’s stake in hotel company Hilton Worldwide Holdings has lost $2.3 billion in value since September.

“It’s really just noise,” Blackstone’s president Tony James said on an earnings call Thursday. “We do not believe the markdowns represent permanent diminution of values, impairments or changes in what we ultimately expect to realize from our investments.”

The Blackstone Group’s realized much of its income from fees it charges investors for managing its private equity, real estate, hedge and debt funds. Weaker performance of those funds translates into lower earnings. Blackstone’s funds have $336.4 billion in assets under management, making it the world’s largest alternative asset manager.

Blackstone’s real estate division, headed by Jonathan Gray, last year made a splash by buying New York’s Stuyvesant Town-Peter Cooper Village for $5.3 billion. The firm also dished out $23 billion for GE Capital’s real estate portfolio in partnership with Wells Fargo and $8 billion for BioMed Realty Trust.

In South Florida, the financial giant regularly trades in multifamily complexes and retail developments. The firm’s Invitation Homes division also operates 175 rental properties in the region.[Bloomberg] — Konrad Putzier

Joel Altman, chairman of the Altman Companies

The Altman Companies has just broken ground on its newest apartment complex in Boca Raton with a $62 million construction loan.

Altman’s community is called Altis Boca Raton, named after the company’s signature Altis brand. The 398-unit project is being built on a chunk of vacant land that Altman owns at 5700 North Military Trail. It’s located within the Park at Broken Sound commercial development, which was rezoned in 2012 to foster new residential and retail developments.

Comerica Bank issued the funds to an affiliate of Altman, according to Palm Beach County records. Construction of the complex officially began Tuesday, the same day that Altman’s mortgage was recorded.

Altman had already started building Altis Boca Raton’s parking garage in December.

This project is one of three being built at the Park at Broken Sound, where developers are planning to deliver 1,050 new residential units. More than 65,000 square feet of retail space is also under development by Boca-based real estate firm Schmier & Fuerring Properties.

Recently, Altman partnered up with BBX Capital to develop a 14-acre stretch of the master-planned Bonterra housing community in Hialeah.

Aventura Mall, Seritage’s Benjamin Schall and Turnberry Associates’ Jackie Soffer and Jeffrey Soffer

Seritage Growth Properties, a publicly traded real estate investment trust that owns Sears’ real estate assets, has filed suit against the owners of Aventura Mall — the Soffers’ Turnberry Associates and Simon Properties — seeking to stop the shopping center’s expansion plans.

The 105-page suit, filed by Seritage SRC Finance against Aventura Mall Venture, cites an easement and operating agreement dating back to 1982, originally between Sears and the mall — now Seritage and the mall. The mall’s expansion violates terms of the agreement “because it proposes structures and development activities that materially deviate from the terms of the plot plan,” according to the suit, filed late Thursday in Miami-Dade Circuit Court.

“Seritage Growth Properties owns a prime 13-acre parcel, including the existing Sears building at Aventura Mall,” Seritage’s attorney John Shubin of Shubin & Bass said in a statement. “Turnberry, the mall’s ownership group, has recently commenced an expansion on mall common areas in clear violation of the longstanding agreement between our property and the mall’s property. With this lawsuit, Seritage is asking the court to enforce the rights established in that agreement.”

A spokesman for Turnberry Associates, led by brother and sister Jeffrey and Jackie Soffer, said the mall owners had not yet seen the lawsuit and could not comment until they had a chance to review it.

According to the suit, the easement and operating agreement is geared “to ensure that the mall is operated for the mutual benefit of the parties and to protect and preserve critical easement rights over the mall’s common areas.” The agreement defines the mall’s common area to include the parking area, the suit says.

 “The [Aventura Mall Venture] expansion is effectively a land grab of the common area by [Aventura Mall Venture] so that it can be utilized solely for [Aventura Mall Venture]’s purposes, contrary to the express restrictive covenants of the [Easement and Operating Agreement],” the suit alleges.

On New Year’s Eve, the owners of Aventura Mall closed on a $213.5 million mortgage for the shopping center, as it embarks on its planned expansion. The mall, at 19501 Biscayne Boulevard, is anchored by Nordstrom, Bloomingdale’s and Macy’s and features 300 stores. In addition to Sears, other retailers include Louis Vuitton, Cartier, Burberry, Gap, J. Crew, Anthropologie and Zara.

Simon Property Group has a 33.3 percent interest in the mall’s ownership. In addition to owning the remaining 66.7 percent, Turnberry also manages the property. JP Morgan Chase is the lead lender of the new loan, according to county records.

In 2014, Turnberry announced it was expanding Aventura Mall to include a new three-story, 241,000-square-foot retail wing and parking garage. The mall first opened in 1983, then doubled its size in 1997 and in 2007, added Nordstrom and a three-level wing of high-end stores. It has more than 2.7 million square feet of space, making it the third largest shopping mall in the United States, behind Mall of the America in Minnesota and King of Prussia Mall in Pennsylvania.

A vintage 1940’s postcard of Bayfront Park in Miami (Credit: Joe Haupt)

1. The stories behind how 25 Miami-Dade neighborhoods got their names [Miami New Times]
2. Shul of Bal Harbour to double its size in $20 million building expansion [Miami Herald]
3. Akerman gearing up to move headquarters across Miami [Daily Business Review]
4. Miami’s Coconut Grove grows from Birkenstocks to billionaires [Wall Street Journal]

— Sean Stewart-Muniz

Current reader favorites:
1. Billionaire Ken Griffin wants to flip his Faena penthouse: $73M
2. Codina and Lennar to buy, redevelop White Course in Doral
3. Terra unveils plan for 47-acre Pembroke commercial project
4. Miami’s housing market is stuttering: Elliman report
5. 25th new condo building proposed for Hollywood-Hallandale Beach market

New York-based Property Markets Group hosted an opening party to celebrate Echo Aventura, the developer’s first completed South Florida project this real estate cycle.

PMG’s Ryan Shear took The Real Deal on a tour of the property, where he said Brazilian, Colombian, Venezuelan and domestic buyers are the majority. The two 12-story towers, at 3250 and 3330 Northeast 188th Street, include 190 units. Closings were first recorded in August and the first buyers moved in in September, Shear said. Echo Aventura marks the third completed condo project in Aventura since the cycle began in 2011.

In December, PMG took out a $33.8 million condo inventory loan unsold units at the waterfront project. Shear said about 10 units remain unsold.

The 5-acre development includes amenities such as access to a bayfront infinity edge pool with views of Privé at Island Estates and the Sunny Isles Beach skyline, a 4,000-square-foot fitness center, two private porte cochere entrances and an event room. Units are fully furnished, and feature summer kitchens and Apple home technology. Prices range from $700 per square foot to more than $1,000 per square foot, Shear said.

Carlos Ott is the project architect and Yabu Pushelberg designed the interiors.

Shear said Porto Vita, an Ugo Colombo and Soffer family project that was completed in 2000 and 2004, and Prive, which is under construction, are the only competing projects in the Aventura market. PMG will staff the building for a year to fix any potential issues and put the finishing touches on the property. “A recurring buyer is as good as it gets in our business,” he said.

PMG has a handful of projects in South Florida, including 300 Biscayne, which Shear said won’t launch until 2017. Echo Brickell will be completed in about 18 months, or October 2018, while Muse Sunny Isles will be completed the first quarter of 2018. Shear isn’t worried about the market slowdown because “we’re not selling anything that’s not out of the ground,” he said.

From the New York website: The Treasury Department’s new initiative to track all-cash LLC buyers has been slammed by industry insiders as unnecessary, unconstitutional and a “witch-hunt.” But the most damning criticism? The initiative, which aims to crack down on money laundering and ill-gotten gains, may not even work.

The order, which requires title insurers to disclose the true buyers of homes over $3 million acquired in-all cash deals through shell companies, only focuses on sales completed with paper checks and dollar bills, and excludes wire transfers, which experts say are commonly used on so-called “cash deals.”

“We don’t have people coming to closings with suitcases full of cash,” said Stuart Saft, who heads Holland & Knight’s real estate practice. Monitoring payments made with currency will have no effect, Saft said, because those payments simply don’t exist at the $3 million-and-up level in Manhattan.

At the luxury price point, the true all-cash deal — which conjures up cartoonish images of men in dark sunglasses slapping down bands of bills after tense negotiations — is close to fiction, said real estate attorney Adam Leitman Bailey.

Paying with cashier’s checks or certified checks, however, is much more common, and is covered by the Treasury’s new reporting requirements. Title insurers typically know more about buyers than any party in a deal, according to real estate attorney Petro Zinkovetsky, and are likely to have collected information that a bank issuing a cashier’s check may not have.

“The bank doesn’t need the information of every single owner of the LLC to issue a check,” Zinkovetsky said. The Treasury Department’s order will likely allow the government to identify LLC members that it could not through its normal monitoring of the banking system.

But by excluding wire transfers, the initiative has no teeth, attorneys said.

“It’s foolish,” said Aaron Shmulewitz, an attorney at New York City-based Belkin, Burden, Wenig & Goldman. “Funds are going to be wired to the title company [directly] in advance of the closing, and the title company is going to hold on to it.” Since title companies will not be asked to disclose LLC members on wire-transfer transactions, the Feds will have to rely on the banking system’s limited ability to track the names behind LLCs.

A spokesperson for FinCEN, the Treasury Dept.’s financial crimes unit, told The Real Deal the government was looking to track “a narrow subset of transactions that are generally not scrutinized under existing AML [Anti Money Laundering] controls, while also minimizing burden by conforming to existing rules that the covered businesses are already familiar with.”

“To the extent that we see a shift to all-wire transactions,” the spokesperson added, “we adapt in the future accordingly.”

But Shmulewitz said the wire transfer loophole was “large enough you can drive a fleet of trucks through.”

“Who initiated the wire transfer? Some bank, some investor in some country abroad?” he said, casting doubt on the government’s ability to reliably identify LLC members.

A source familiar with the workings of the Treasury Department told TRD the government may already feel confident in its ability to track wire transfers. Payments by money order, the source said, are messier because the records are often on paper and are more tedious to track down. In such cases, going directly to the title insurer for information is a better bet.

FinCEN has brought the hammer down hard on banks that have failed to do due diligence on foreign wire transfers.  In 2012, it hit HSBC with a $500 million civil penalty for its failure to adequately review trillions of dollars in annual transfers. And in 2015, the German Commerzbank AG agreed to pay a penalty of $258.7 million for, among other things, violating U.S. sanctions by processing 959 wire transfers and other transactions involving Iranian financial institutions.

Another source put forward a more bureaucratic reason: the Treasury form used to enact the order, FinCEN Form 8300, which is used to report transactions over $10,000, does not cover wire transfers, and the form would have to be formally changed for it to do so.

“We’re asking the title insurers to use an existing form with existing definitions,” a FinCEN spokesperson said. “A covered transaction is triggered only when ‘such purchase is made, at least in part, using currency or a cashier’s check, a certified check, a traveler’s check, or a money order in any form.’  This generally conforms to existing Form 8300 requirements (which are not triggered by wire transfers), which reduces burden on covered businesses because they are already familiar with the Form 8300 filing requirements and have filed Form 8300’s in the past.”

The temporary “geographic targeting order” on Miami and Manhattan real estate begins on March 1 and ends on Aug. 27, at which point many believe the government will assess what it has learned and move to implement something that is both more comprehensive and more permanent.

“They’re going to need to start from scratch,” Bailey said.

Frank Peng

In a bid to further tap markets abroad, Cervera Real Estate has hired Frank Peng as its new vice president of Asian business development.

Peng is a veteran of the cruise industry, where he helped leisure giants like Royal Caribbean International and Norwegian Cruise Line expand their businesses as a corporate strategist. Most recently, he started his own firm facilitating Chinese investment with a focus on U.S. real estate.

His new role at Cervera will be much the same: Peng will lean on his existing contacts to bring in business for the brokerage. He’ll also help lay the groundwork for Cervera to open a pipeline to China, making sure that a potential buyer’s cultural needs are met, Jesse Ottley, Cervera’s president for development sales told The Real Deal.

The hire comes amidst economic turmoil in Asia, where a volatile stock market has brought the health of China’s economy into question. That in turn has bred fear of Chinese investment dollars drying up after two years of heavy outflow into U.S. markets like New York City. 

Ottley said the opposite could be true. He said the “true motivators” — security, quality education for their children and economic stability — will continue to drive Chinese buyers into the U.S.

“The second there was a bump in the markets we saw a significant jump in interest,” Ottley said. “For the real buyer, this country represents tremendous stability.”

In Miami, brokerages and developers had turned their attention toward China as a possible replacement for weakening South American markets — though the region has not yet seen the flood of activity that New York has.

Cervera’s Peng hopes to change that. He said in a news release that he’ll work to improve Miami’s popularity among Asian buyers, enough so to rival major markets like San Francisco and New York City.

Correction: A previous version of this article incorrectly stated Jesse Ottley was Cervera’s vice president development sales. His title is president. The article also incorrectly stated Frank Peng helped Royal Caribbean International and Norwegian Cruise Line expand to China. He instead acted as a corporate strategist. 

Masoud Shojaee and Ugo Colombo, once partners in the planned Collection Residences, are now embroiled in a bitter lawsuit filed by Shojaee, alleging that Colombo sabotaged their planned project.

The suit, which follows the end of their partnership in November, centers around retail space and parking for the Collection, Colombo’s luxury car dealership across the street from the planned Collection Residences in Coral Gables. Shoma Coral Gables filed the suit in Miami-Dade County Circuit Court against Gables Investment Holdings LLC; Colombo, individually; and the Collection.

Read more here.

Meadowgreen Apartments in Hialeah

The Miami-based CFH Group will open a new building at a Hialeah apartment complex in February. 

CFH added 22 fully leased apartments to Meadowgreen Apartments, a now 141-unit community at 1955 West 54th Street. The new apartments are market-rate, while the existing 119 are Section 8 units, according to a press release.

The development and property management company has nearly 6,000 multifamily units and more than 500,000 square feet of commercial space in its portfolio throughout the southeast of Florida. CFH CEO Tom Cabrezo said in the release that the new apartments will provide affordable rates in a competitive market.

To qualify for the Section 8 units, residents are required to prove that a household’s income is less than 50 percent of the area median income. While there are a number of new affordable housing projects in South Florida, the area is in need of more, developers and experts said.

In December, former NBA player Alonzo Mourning and Housing Trust Group topped off the first phase of their affordable housing project in Miami’s Overtown neighborhood. The nearly $23 million project, Courtside Family Apartments, includes 84 units. And earlier this month, Pinnacle Housing Group opened Gibson Plaza, a senior housing and market-rate complex in Coconut Grove. – Katherine Kallergis

Gulf Stream Hotel Lake Worth

Lake Worth’s Gulfstream Hotel, built in 1925 and added to the National Register of Historic Places in 1983, looks set to be revived after being shuttered for more than 10 years.

Last month, the Lake Worth City Commission approved a zoning change that will allow Delray Beach-based developer Hudson Holdings to go ahead with its $70 million plan to renovate the property at Lake Avenue and South Lakeside Drive, a block from the Intracoastal Waterway.

The commission approved a rezoning of the seven-parcel site to entirely downtown mixed-use from the previous combination of downtown mixed-use and multi-family residential.

Hudson Holdings plans to restore the crumbling, six-story hotel, shrinking its room count to 87 from 106, and intends to wipe away two nearby buildings so it can erect a five-story, 87-room annex to the hotel instead. Both buildings will carry Hilton’s upscale Curio Collection brand.

“This is an iconic Palm Beach County hotel with enormous history,” Steve Michael, co-founder of Hudson Holdings, told The Real Deal. Sitting several blocks away from Lake Worth’s downtown, “it’s a focal point of the Lake Worth community and at the edge of the [town of] Palm Beach community,” he said. Palm Beach lies across the Intracoastal from Lake Worth.

He equates the Gulfstream Hotel’s prestige to that of Palm Beach stalwarts the Breakers and Four Seasons. Hudson Holdings specializes in renovating landmark historic buildings. “We will follow the National Trust for restoration guidelines,” Michael said.

The new Gulfstream will have a downstairs restaurant and a rooftop sky bar. The annex building will include a health club that’s open to the public. There also will be a two-story, 73-space parking garage. Hudson Holdings will manage the project.

Michael says the development will be crucial for revitalizing downtown Lake Worth, which like downtown West Palm Beach to the north, has some vibrant areas and also some vacant ones. “This is a catalyst to downtown renovation,” Michael said. “We own a lot of properties [apartment buildings] in downtown Lake Worth and look at this as a key to future development there.”

Lake Worth has been criticized for being inconsistent in its development, because of staunch political opposition to building plans. Even the city commission’s approval of rezoning for the Gulfstream project came only in a 3-to-2 vote. The opponents, commissioners Christopher McVoy and Ryan Maier, were unavailable to speak with TRD, but they have publicly expressed concern about the height of the project, specifically the 65-foot maximum for the annex building.

Michael, of Hudson Holdings, scoffs at the criticism. “The height of the annex is lower than all the surrounding buildings,” he said. “There’s no reason to be concerned about 65 feet when the ones next to them are 75 feet and 100 feet. This is just a way for a group of people who don’t want Lake Worth to move forward to try to get their way.” The opponents’ don’t have the city’s best interests as their priority, he said.

The affordable housing community at 5500 West Haverhill Road

The West Palm Beach Housing Authority just sold a rent-regulated apartment complex to a Chicago investment firm for $7.8 million.

Dubbed Royal Poinciana Place, the community has 144 units and is located at 5500 North Haverhill Road near the Palm Beach Lakes Community High School.

The city’s housing authority paid $2.7 million — or about $18,750 per unit — to purchase Royal Poinciana three years ago, according to Palm Beach County records. Units at Royal range from 756 square feet to 1,102 square feet. Its tag line is “live the good life… affordably.”

Now, the public agency has sold the complex for roughly $54,166 per unit to an affiliate of Chicago’s Lakeside Capital Advisors. The real estate firm primarily invests in workforce housing. Many of their deals include apartments that were built using the federal Housing Tax Credit program, according to Lakeside’s website.

Royal is encumbered by a land-use agreement between its original developer and the Florida Housing Finance Corp. The original agreement called for 80 percent of the building’s units to be set aside for “very low income” residents for 50 years. It was dated 1995, so that leaves about 21 years left in the restriction.

Real estate experts have called West Palm’s lack of affordable housing troubling. Median home prices have steadily risen in the coastal city, while median household incomes have struggled to keep up.

Grato in West Palm Beach and Pincho Factory (bottom right)

The Weekly Dish is a TRD recurring feature that showcases the latest in South Florida’s restaurant openings, leases and sales.

Pembroke Pines welcomed its first Pincho Factory, the owners of Yuca and Ceviche 105 are planning Cubiche 105, and Ichimi opened in downtown Coral Gables. 

Pincho Factory | Pembroke Pines

Miami-based Pincho Factory opened its fourth standalone location in South Florida and the first in Broward County. The new fast casual restaurant, at 155 North Hiatus Road, seats 67 and spans 2,300 square feet, according to a spokesperson. Lease details were not disclosed.

The Pembroke Pines location serves lunch and dinner with beer and wine seven days a week. Pincho Factory is known for its burgers and pinchos, or kebabs. The former tenant is Giraffas Brazilian Grill.

Ichimi | Coral Gables

The Japanese eatery opens Friday at 2330 Salzedo Street in Coral Gables. Ichimi, helmed by executive chef Constantine De Lucia, features a beer and sake room behind a glass wall that showcases the restaurant’s noodle-making machine. The 2,000-square-foot space will seat up to 60, a spokesperson said.

De Lucia comes from Momi Ramen, Lure Fishbar and Estiatorio Milos by Costas Spiliadis. The menu includes ramen three ways – traditional, dipping-style and cold ramen. Krave Art is commissioning a mural for the space, according to a press release. Bread + Butter was a former tenant of the space.

Ichimi has plans for a second location in the South-of-Fifth neighborhood of Miami Beach.

Cubiche 105 | Miami Beach

The brainchild of popular eateries Yuca and Ceviche 105, Cubiche 105 signed a lease with the city of Miami Beach for 7,130 square feet on Washington Avenue.

The new restaurant at 1555 Washington Avenue will offer a fusion of Cuban food and Peruvian food. Noah Fox, associate and general counsel of Koniver Stern Group, represented the joint venture tenants. The city of Miami Beach was represented by Max Sklar, director of the Tourism, Culture and Economic Development Department and Mark Milisits, asset manager of the Office of Real Estate.

The 10-year lease is priced at $56 per square foot, triple-net, with an aggregate value of $5.1 million. The tenants will be making improvements to the space before opening in the spring. The site was formerly Bar-B-Que Beach Bar and Restaurant, which has closed. [more]

First Watch | North Miami Beach

First Watch, a breakfast, brunch and lunch restaurant, opened another South Florida location in North Miami Beach last week.

The space, at 1692B Northeast Miami Gardens Drive, is the 47th location for First Watch in Florida. It also opened in Pembroke Pines in December. The menu includes items like avocado toast, smoked salmon eggs benedict, breakfast tacos and lemon ricotta pancakes. The restaurant is open from 7 a.m. to 2:30 p.m.

Grato | West Palm Beach

Grato, a 150-seat restaurant in West Palm Beach, opened last week on the South Dixie Corridor. The eatery is the first for Palm Beach-based Buccan Group, and includes a dining room, bar and lounge, and seating along the open kitchen and pizza bar. Chef Clay Conley will lead the kitchen.

The 3,600-square-foot dining space features exposed beams, stained concrete floors and large windows. The design incorporates marble, dark wood, leather bar stools and lounge furniture. Grato is open seven days a week for dinner and will start serving brunch and lunch in the future.

A spokesperson declined to provide lease details, but said the space totals 6,000 square feet.

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Hungry for more? Check out other recent openings: Da Tang Unique in Brickell, Spring Brothers Irish Pub in Miami Beach and Novikov Bar & Grill in downtown Miami.