Miami condo king prepares to handover empire to sons

Bloomberg

Jorge Perez, the billionaire who helped turn South Florida’s skyline into a beacon for Latin America’s wealthiest, is preparing to hand over his empire. The 66-year-old developer, known as Miami’s “Condo King,” said he hopes his sons Jon Paul and Nicholas will take the reins of the Related Group soon so he can focus more on travel, philanthropy and his art collection. Jon Paul, 31, has been working with his father out of the Miami office, while younger brother Nicholas, 28, works for New York-based Related Cos., a partner on some Related Group projects that operates independently.
“They’ll keep on earning their place in the company, and of course my hope would be that they would come to run the company a few years from now,” Perez said in an interview at his Miami office, where the walls are lined with works from the art collection he handpicks with two full-time curators. “I can act much more as sort of the true chairman of the company and do some of the things that I want to do.”
Jorge Perez survived South Florida’s real estate crash, restructuring more than $1.5 billion of debt on condominium projects in 2010 after buyers couldn’t get mortgages or simply walked away from deals after putting down deposits. As he plans to take a lesser role in running his company, the luxury-home market is softening again. The stronger US dollar is diminishing the buying power of overseas investors, whose cash purchases stoked Miami’s condo boom. Brazilians in particular have seen their fortunes dwindle as their home currency lost about a third of its value in the past two years.

Lessons Learned
Perez is still one of South Florida’s most prolific residential builders, with 15 condo projects under way, and said he’s learned lessons from the bust. Like other developers this cycle, Related has built many of its recent projects with large cash deposits, making both buyers and the company less dependent on financing. And while Miami is still the heart of his business, Related Group has diversified geographically, expanding to countries such as Mexico and India.
“The one person who could teach me something about real estate is Jorge Perez,” Donald Trump, the property mogul turned U.S. presidential candidate, wrote in the foreword to Perez’s 2008 book, “Powerhouse Principles.”
The elder son, Jon Paul, participates in staff meetings across divisions – condos, rentals and affordable housing – and is being groomed to take leadership on development and finding land deals. For the first time, he was put in charge of marketing and building out the sales office for a Related project, the Auberge Miami, a planned three-tower complex on downtown’s Biscayne Boulevard with 1,400 units priced at a median of $1 million.

Priciest Project
Jon Paul recently brought in a deal in the Miami Beach area that he said would be the site of the company’s priciest-ever condo project on a per-square-foot basis, with units costing more than $2,500 a square foot.
“It’s very exciting because I was involved completely in the acquisition and hopefully taking it through the whole process and being able to develop it,” said Jon Paul, who earned a master’s degree in business administration at Northwestern University’s Kellogg School of Management. “It’ll be a very visible, high-profile job in Miami.” Nicholas is an associate in Related Cos.’ New York development group, and considering an MBA. He previously worked with C-III Capital Partners, which originates and underwrites commercial mortgage-backed securities among other real estate services.
Construction Cooldown
While Related Group is confident about upcoming closings, the pace of construction will probably cool, Chief Operating Officer Matt Allen said.
“Unless you’re writing huge equity checks, I don’t think you’re going to see a lot of new launches on the condominium side, unless they’re very petite, boutique type of deals,” he said. “You’re not going to see these big towers until the South American market recovers and you start seeing that buying happen again.”
Perez may be passing the torch while he’s on top, said Peter Zalewski, owner of South Florida development tracker CraneSpotters.com, who noted that the president of builder Swire Properties, Stephen Owens, also announced his retirement recently.
“It may be an indication that the old chieftains realize they don’t want to go through the cleanup process like the last time,” he said. “Or maybe it’s just coincidental.”