Friday, August 21, 2009

International Condo Investor Scoops Up 10 Units in Miami for a Record Low $156 Per SF

MIAMI, FL—Predictions that Miami’s discounted condo market would fall even further than it has, price-wise, bore fruit today.

The market rang up its lowest per-square-foot-price in at least five years today when international condo investor Rodrigo Nino (middle left photo) of New York purchased 10 units in the Brickell on the River South Tower condominium for $156 per square foot.

That price was a 43 percent discount off of the project's average closed price, according to a new report from Condo Vultures®.

A newly created Miami corporation, Prodigy Capital Investments LLC, paid $1.9 million for five one-bedroom units and five two-bedroom units with 12,081 square feet located on floors three to eight in the 49-story tower situated on the south bank of the Miami River.

Brickell On The River Inc., headed by Michael Bedzow was the seller. Nino is a managing member of Prodigy Capital.

"This is the lowest price paid per square foot by a bulk buyer in Greater Downtown Miami," said Peter Zalewski, (middle right photo) a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures®.

"Prior to this transaction, bulk buyers accumulating product in Greater Downtown Miami have paid between $199 and $246 per square foot. A key reason for the discount realized on the Brickell On The River bulk deal is the location of the units."

It is unclear how the Chapter 11 bankruptcy filing on Aug. 18 by the developer of the Everglades On The Bay (bottom left photo) condominium project will impact future pricing, Zalewski says.

Despite being located on Biscayne Boulevard in Greater Downtown Miami, the Everglades On The Bay has closed only 9 percent of its 849 units at an average price of more than $425 as of June 30, according to

With this latest bulk deal, the Brickell On The River South Tower has now closed 92 percent of the 327 units in the loft-style building, according to the Condo Vultures® Official Condo Buyers Guide to Miami.

On a transaction basis, this is the sixth bulk deal to close in Greater Downtown Miami and the 11th overall dating back to July 2008. Nine of the 11 transactions have occurred in Miami-Dade County, and two have closed in Palm Beach County, according to a recent article.

With the Brickell On The River deal, bulk buyers have now acquired 613 units with 650,000 square feet for $129.4 million. This works out to an average price of $199 per square foot or $211,070 per unit, according to the Condo Vultures® Bulk Deals Database.

According to the New York Daily News, Nino controls the biggest international network of real estate salespeople representing some of the top new condominium projects around the world.
“He sells New York to the globe, and recently has diversified, selling the rest of the world to New York,” the newspaper reports.

With a network of 45,000 potential customers and 22,000 global real estate brokers, Prodigy has a history of selling out upscale international projects from Miami to Panama to Mexico. The company's SoHo office opensed in a loft in June of this year.

“There might not be a more knowledgeable person than Nino at understanding the global real estate market and what foreign buyers want,” the paper reports.
"Lifestyle is not just a word to the European or Latin American buyer," says Nino, sitting in the office of the Trump SoHo Condo-Hotel, one of the local projects his company represents.

"These buyers are sophisticated, wealthy and spoiled. They are used to the best. Manhattan has the best restaurants, culture, nightlife and shopping. It also has the best condos."
A former economist trained in his native Columbia and Switzerland, he's a self-admitted numbers man.

"Sales are the direct conclusion of a well-thought numeric strategy," says Nino, who has four offices worldwide and approximately 120 employees working for Prodigy. "Sales come when everything works exactly right."
"You have to work with people who know their countries. The key for us, though, is selecting the right condos to represent. We only do the best, and that's why they sell so well."
The "best" include 24 developments in more than eight countries.

In addition to the Balazs and Trump projects in New York, Prodigy represents developments in what Nino calls the three hottest international markets besides New York — Mexico, Panama and Miami.

Recession Hurls InterContinental Chicago O’Hare and Radisson Los Angeles Airport Into Chapter 11

CHICAGO, IL—The 21-month-old Recession has claimed two major U.S. hotels – the one-year-old, 556-room, 12-story InterContinental Chicago O’Hare (top right photo) and the three-year-old, 580-room Radisson Los Angeles Airport. (middle left photo)

Both hotels continue to operate normally while their bankruptcy petitions are being reviewed by the courts. The petitions were filed by the hotels’ owner, Harp Group of Oak Brook, IL.

With about $278 million in combined debt -- $158 million on the O'Hare property and $120 million on the Los Angeles property -- Harp is seeking a reorganization plan to continue operation of both hotels.

“Launched with high expectations less than a year ago, the newest luxury hotel at O'Hare (International Airport) is the latest victim of a crushing economic downturn that has devastated occupancy rates, forcing hotels to cut deals to lure customers,” the Chicago Tribune reports.

"It was absolutely necessary to request loan modification from our lenders," Harp Group president Peter Dumon (bottom left photo) told the Tribune. "Unfortunately, we had a very hard time even communicating with them."

The hotels were financed by San Diego National Bank, a unit of Oak Park-based financial-services firm FBOP Corp., and Amalgamated Bank, a New York-based lender owned by hotel workers union Unite Here.

Negotiations to refinance the debt began in October and broke down this spring, according to Dumon.

While the hotel industry has been rocked by the recession, the O'Hare market has been particularly hard-hit, according to Elmhurst, IL-based hotel consultant Ted Mandigo.
(middle right photo)

He told the Tribune that year-over-year airport hotel occupancy is down from 68.2 percent to 52.6 percent through June, while average room rates have declined from about $120 to $99 during the same period.

The InterContinental has been running at just over 50 percent occupancy, according to Dumon.

"They're struggling with everyone in that airport market area, offering discounts, cutting rates, packaging anything to stay alive during the recessionary period," Mandigo says.
He adds, “Many hotel owners across the country are in negotiations with lenders, hoping to rework financing that has become unsustainable during the recession.

“…Most banks would rather adjust the terms -- perhaps seeking lost revenue on the back end of the loan -- than take the keys to the property through foreclosure.

"Today, they're not getting checks. If they pick up the keys, then they've got to start writing checks."

When negotiations break down, filing bankruptcy is a way to get the lender back to the table, Mandigo says."Bankruptcy filing is just something that gets the attention of the banks and it pushes them to be more creative in the solution," he says.

"It puts pressure on the lender."Dumon agrees that Harp Group is still seeking new terms from its lenders, adjusted to reflect "more realistic values" than the current debt does.

Of the Chicago hotel, he says, "It's a beautiful hotel in what historically has been an outstanding market. We expect when the economy recovers, that will be true again."

He adds, "Our goal is to restructure the debt and the equity on each asset so that we can continue to own them on a long-term basis.

"We certainly understand that that obligates us to bring new equity to the table, and we're prepared to do that."

In addition to two of its own developments, the Harp Group acquired six properties for about $350 million between 2005 and 2007, including the Ambassador East in Chicago.

Dumon says the bankruptcy filing does not affect the other properties, but he acknowledges the prices of all hotels purchased during that (2005 to 2007) time frame now seem too high, given the current environment.

"If you had a crystal ball and a rear-view mirror, nobody would have bought anything," he says.

Marcus & Millichap Sells $28M Luxury Retail Asset in Beverly Hills, CA

BEVERLY HILLS, CA– Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has arranged the sale of the Hugo Boss department store, (top right photo) a Class A, 11,333-square foot net-leased property in Beverly Hills.

The sales price of $28 million represents a cap rate of 4.7 percent and $2,471 per square foot, both records in the current market.

David Feldman, sales manager of the Atlanta office of Marcus & Millichap, represented the seller, Lladro Realty Inc., in this transaction.

Additional representation was provided by Justin White, regional manager of the firm’s West Los Angeles office. Allied Golden LLC acquired the asset.
“This property is located on world-renowned Rodeo Drive in the heart of the Golden Triangle,” explains Feldman.
“Surrounded by other luxury retailers, the vacancy rate in this submarket remains extremely low.

"The sale indicates that investors are still interested in Class A assets occupied by strong credit tenants in prime locations.
"Over the long-term, the new ownership will capitalize on this property’s irreplaceable location in one of the most sought-after retail markets in the world.”

Located at 414 N. Rodeo Drive, the three-story, Hugo Boss department store was constructed in 1996 and has secured underground parking.
In 2006, Hugo Boss invested more than $3 million in tenant improvements to the property.

The Hugo Boss store is surrounded by other high-end luxury retailers including Cartier (top left photo), Gucci, (bottom left photo) Ralph Lauren, Chanel, Luis Vuitton, Giorgio Armani, and Tiffany & Co., thus attracting some of the most affluent shoppers in the world to the submarket.
For several years, Hugo Boss has ranked among the global market leaders in superior fashions, and has been progressively extending this position, according to Feldman.
Today the fashion company generates sales of approximately 1.6 billion EUR ($2.1 billion USD) with a workforce of more than 9,500.

Further indicators of the company’s strength are the high number (over 1,250) of Hugo Boss Stores operating worldwide. There are currently more than 1,250 stories spanning the globe.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716

Thomas D. Wood Brokers $2.87M Texas Restaurant Loan

ORLANDO, FL—Aug. 21, 2009— Thomas D. Wood and Company, a Strategic Alliance Mortgage LLC member, secured financing in the amount of $2,875,000 for Carino’s Italian Grill (top right photo) and Shoppes at Canopy Park.

Jeff Schnupp, (bottom left photo) Company Vice President, financed Carino’s Italian Grill in the amount of $1,900,000 through Thomas D. Wood and Company’s relationship with a local credit union at an interest rate of 6.875%.

The loan term is seven years, based on a 25-year amortization, and a loan-to-value of 76%. The 6,900 square-foot single-tenant restaurant was built in 1999 and is located at 106 E. Highway 332, Lake Jackson, Texas.

John Worrell, Company Assistant Vice President, financed Shoppes at Canopy Park in the amount of $975,000 through Thomas D. Wood and Company’s relationship with a local bank at an interest rate of 6.4%.

The loan term is five years, based on a 25-year amortization, and a loan-to-value of 70%.

The 10,186 square-foot retail center is home to tenants Earth Pets and Spherion Staffing. Shoppes at Canopy Park was built in 1998 and is located at 500 NW 60th Street, Gainesville, Florida.

For further information, please contact:
Jeff Schnupp, (407) 937-0470,
John Worrell, (407) 937-0470,
Jessica Gurtowski, (407) 937-0470,