Jorge Pérez Is Buying, Planning New Projects Amid a Glut He Helped CreateJorge Pérez, the “condo king of Miami,” has had a bad couple of years. He struggled with a multitude of lenders and buyers, gave up properties and lost more than $1 billion of his personal net worth.
Now, he is attempting a comeback even as Miami’s condo market continues to suffer from the glut Mr. Pérez helped create. He purchased a dozen development sites in the last year, snatched up distressed real estate and is even planning new projects.
“What goes up must come down,” Mr. Pérez says. “This is true. But the opposite is also true.”
Mr. Pérez’s attempt at a comeback marks the latest chapter in the colorful career of one of Miami’s best-known businessmen, philanthropists and political fund-raisers. He is an avid art collector, hangs out with celebrities like Jennifer Lopez and Gloria Estefan and is a regular in courtside seats at Miami Heat basketball games.
Mr. Pérez’s deals also are a reminder of the resilience of some real-estate developers who have been able to find money to start doing deals even as the housing market is still hurt by the downturn. In his case, he has been able to continue to find partners and draw on some $1 billion of his own wealth.
A group led by Mr. Pérez’s Related Group and Florida real-estate developers Jimmy Tate and Sergio Rok were expected to close this week on a deal under contract to buy the note on the Omni International Mall complex in downtown Miami, which includes a 500-room Hilton hotel and 420,000 square feet of office space nearby, according to people familiar with the matter.
At the same time, Mr. Pérez has his eye on new construction. Even with 5,000 unsold condominium units in Miami, Mr. Pérez plans to break ground before the end of the year on two projects, with the help of $100 million of his own money that he has contributed to his company in the past year, he says.
Mr. Pérez’s rebound is far from a sure thing. Condos in some parts of South Florida are selling for as little as half of what they went for at the peak of the market and conventional bank financing remains scarce. Related has cut prices at its buildings by as much as 60% and faces lawsuits from hundreds of buyers seeking the return of their deposits.
Some of those would-be buyers aren’t thrilled with Mr. Pérez’s comeback. “They said they didn’t give me money back because they’re undercapitalized,” says Joseph Ferrelli, a retired garment wholesaler who is suing Related to get back a $195,000 deposit on a unit at Mr. Pérez’s Trump Towers project in Sunny Isles Beach. “Before they start building again, I want my 200 grand back.”
Related has argued it is under no obligation to return entire deposits to buyers like Mr. Ferrelli. But it has settled dozens of these types of cases.
Mr. Pérez, 61 years old, still has vacation homes in Utah and Uruguay, a private jet and a Maserati GranTurismo. But he acknowledges that the downturn has taken a toll. “Of course the crash changed me,” he says. “One becomes distinctly aware of one’s vulnerability regardless of the amount of planning.”
Mr. Pérez claims to have a sound strategy for developing and selling condos in the face of a glut of some 5,000 condos still on the market. He hopes to capitalize on interest from Latin American and European real-estate investors, who are slowly but steadily buying the city’s unsold inventory.
Related also plans to finance much of its new projects by unconventional means, requiring buyers to pay more than 70% of the cost of building their condos before closing, instead of just a 20% down payment on the property, as was typical in the past.
Mr. Pérez has to pursue unorthodox financing strategies because conventional lenders are in no hurry to make new loans. Mr. Pérez, who developed more than 15,000 units during the boom years, still carries bruises from his many battles with his lenders during the bust. At the Trump Hollywood, for example, HSBC foreclosed on the property late last year and sold its $227 million mortgage note to a Florida developer for $180 million.
A former urban planner for the city of Miami, Mr. Pérez dreamed of transforming Miami into a 24-hour city with restaurants and night life downtown. He brought a new level of luxury to the market catering to upscale professionals, professional athletes and celebrities. For two of his projects, he licensed the Trump name from Donald Trump.
But when the buyers vanished, he had four major projects underway, with over $2 billion in debt. Mr. Pérez went through three years of restructuring talks and fights with creditors. Among his most painful was turning over to lenders two of his most high-profile projects: Icon Brickell and Trump Hollywood.
To pay off creditors, Mr. Pérez also had to sell hundreds of condos from previous projects at steep discounts. Around the same time, Mr. Pérez was found to have a golf-ball-size tumor on his pancreas, which later turned out to be benign but which required surgery and a difficult recuperation period.
“He was depressed at the time, seeing a billion dollars of net worth coming off the table,” says Stephen Ross, the billionaire New York real-estate investor and partner of Mr. Pérez.
Mr. Pérez’s health has returned and now he also is trying to restore his fortune. He acknowledges he overreached: “Was [condo development in Miami] too fast? Yes. From a personal economic point of view, it was definitely too fast.”