The Real Deal New York

Related’s Jorge Pérez puts his stamp on the skyline

By Adam Piore | May 01, 2013 07:00AM

Jorge Perez

If you follow real estate, it’s hard to miss Jorge Pérez.

In just the past couple of months, the Related Group chairman and CEO has announced plans to collaborate on the $300 million SLS Brickell, a cutting-edge condominium-hotel project in Downtown Miami, with famed hotelier Sam Nazarian. And he cut the ribbon in Boynton Beach on a 14-story condo-hotel called Casa Costa. In Broward County’s Hallandale Beach, he unveiled plans for another condo-hotel.

All told, Pérez estimates he is tied in some way to at least 40 projects — not counting a myriad of international ones. Right now, Related is the region’s most active condo developer, with nine in the works.

“I’m very bullish,” he told The Real Deal. “At the same time, I don’t want to sound like an idiot. I know that if we keep with the exuberance like we’re having right this second, the market will at some point say, ‘Enough.’ And you just have to be measuring that all the time in order not to get overextended.”

It’s a lesson Pérez learned from the financial crisis. In the crush of the current activity, it’s easy to forget that just a few years ago Pérez was caught in the maw of the great South Florida real estate crash. In January 2009, he stood before a ballroom full of lenders representing Related’s almost $2 billion in unpaid loans and made a presentation that may well have saved his 30-year-old company.

“We all partook in this great, great big party, in which we overdrank and overate, and then at the end, somebody had to pay for the broken dishes, right?” says Pérez, who has estimated that Related projects lost about $3 billion in value during the downturn. “We went from being the golden company to being the one with the biggest issues. I mean the bigger they are, the harder they fall, right?”

Pérez, though, acted responsibly at the height of the housing bubble, despite his orgy analogy, insist those who know him.

“As much as everybody might think he is a wild-child risk taker, every one of his risks are well calculated and well thought out,” says Gil Dezer of Dezer Development, which is building Porsche Design Tower Miami, a luxury oceanfront residential skyscraper —complete with car lifts.

Still, even with the economy clearly on the mend, Pérez insists he’s taking a different approach, a conservative method of financing common to the Latin American luxury market: Buyers must put down 30 percent to 40 percent before Related will start construction and then must pony up more as the project progresses; in the end, the company winds up borrowing less than 20 percent of job costs.

Dezer had his doubts at first about Pérez’s high-deposit demands but became a believer after Pérez “proved the model could work.”

“Now everybody else is following his projects,” Dezer says. “And since everybody is being very successful with it and buyers are coming and will pay, I thought I might as well jump on the bandwagon and require 30 percent at the Porsche project.”

It’s certainly not the first time Pérez has been ahead of the pack. Almost from the beginning of his career he has proven adept at anticipating trends, sizing up market conditions and making a killing — and most of his peers agree he has done more to transform the Miami skyline than any other developer.

Pérez landed in Florida in 1968 on his own, just before he turned 20. His journey was a winding one. It started in Buenos Aires, where he was born in 1949; then to Havana, where his parents had come from. Next was Colombia, where his family fled after the Cuban Revolution in 1959; and, finally, the U.S.

That initial stay in Miami didn’t last long. He studied economics at Miami Dade Junior College, then jumped to C.W. Post on Long Island for a bachelor’s degree in economics. He returned to Miami in 1976, with a master’s in urban planning from the University of Michigan, to work for the city’s Community Development Agency.

Two years later, Pérez took a job doing market research and appraisals for a consulting firm called Landauer — and started buying up real estate. Most of those first jobs were rehabilitations of older buildings, affordable-housing deals, financed through government loans and funds raised from syndicates of wealthy investors looking for tax shelters.

About the same time, Pérez met the man who would become his partner and best friend: developer Stephen Ross, nine years his senior. Ross lived in New York but was spending quite a bit of time in his hometown to stay with his ailing father.

Looking for something to fill the hours, Ross began poking around for projects. One day, the head of Miami’s Planning Department suggested Ross meet Jorge Pérez, a bright twentysomething urban planner who had left the administration a few months before.

The two clicked. Soon, they were partners. Perez opened the Related Group of Florida, the Miami office of the Related Companies that Ross founded in New York. Ross held the majority stake; today, Perez owns 80 percent.

“He was hardworking, very bright and very driven,” Ross recalls. “And he is probably one of the most passionate individuals you have ever met — about whatever he is doing, art, work, eating.”

By the mid-1980s, Related was the biggest affordable-housing builder in Florida, and Pérez wanted to expand into market-rate units. And he was ready. He had an edge — an understanding of the rise and fall of neighborhoods that he gained at Michigan coupled with his firm grasp of Miami from his days as a city planner.

Pérez noticed goings-on that his competitors didn’t — water and sewer lines going in, an influx of young artists, a new theater or maybe a business popping up.

“As you do project after project after project, you start getting a very good gut sense as to what area you should be in,” Pérez says. “But more importantly than what area, at what price, and what type of unit you should be in that area.”

Pérez didn’t rely on instinct alone, though. He did exhaustive research, including surveys of competing projects, and he spent countless hours talking with developers who he describes as “forward thinking.” He even traveled to Texas and California to find out why those states had such superior garden-type apartment stock. He wanted Florida to have the same quality, so he hired their architects.

“You first start by imitation, and then you make them better than those that you imitated,” Pérez says.

By 1995, Related had grown to be the largest developer in Florida, with 500 employees, at least 17 projects underway and annual profits of $25 million a year. And Perez’s personal influence was surging, too — a top fundraiser for Bill Clinton, a Clinton adviser on Cuban policy and eventually a Clinton appointee to the National Council on the Arts.

Pérez’s next conquest was the luxury market, and he commanded it quickly. In just a few years, Related built 55,000 units — 15,000 in South Florida. Its projects carried a value of more than $10 billion.

Nowhere was the Perez effect more apparent than in Miami.

It was Pérez who first saw the potential in the downtown area, building luxury condo high-rises in desolate neighborhoods, notes Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, one of the largest high-end real estate brokers in South Florida.

“It changed the landscape dramatically overnight,” Shuffield says. “Thousands of new people were now able to live and work in the downtown area.”

Related fortunes, though, were about to change — along with every other developer — and it had a lot to lose. By 2007, when the market showed the first signs of faltering, Perez had 11 projects under construction in the downtown area, including the $1.5 billion Icon Brickell hotel-condo complex on a $93 million, five-acre plot of land on Brickell Avenue. Before 2008 closed, with most of the projects unfinished, the housing bubble burst.

In January 2009, Pérez rented a ballroom in the downtown Miami Hilton and summoned 80 lenders together. They held well over $2 billion in debt for seven of his distressed projects, many sold out — before the downturn. Then, buyers had a change of heart and the deals still left had failed to close.

Pérez firmly believed the plan he had come up with would work — that if his lenders stuck with him, they would minimize their losses or come through with no losses at all. But as he faced his audience — his future really — Pérez couldn’t help but marvel at how far and how fast he had fallen.

“My God,” he says, recalling his thoughts. “Everything I worked for could be gone in a matter of minutes if these people all say, ‘We’re not going to work with you.’

“You feel that all the power that you think you have to sway people and so forth sort of disappears,” he recalls. “You feel insignificant.”

Still, even as Related teetered on the edge, Pérez looked straight ahead. He won more time from the lenders and many renegotiated. He even formed another group with investors to buy up distressed assets.

“If you have a sick friend,” Pérez says, “it doesn’t mean that your life stops just because you are tending to him.”

In the end, the market came back far faster than many predicted, and those deals have turned into “home runs” for Pérez.

And the future looks bright again, too. To design his $300 million SLS Brickell condo-hotel project, Perez has hired starchitect Philippe Starck, who designed the South Beach SLS. The project will break ground this summer.

“The SLS is definitely the most exciting project that we have going right now,” Pérez says. “Brickell is becoming the area in urban Miami to be in. We’re in the middle of everything. But there hasn’t been a real, cool, hip South Beach–type hotel. ”

Besides the hotel project and other projects that have been announced, Pérez has more than a dozen other jobs in the works, including a “couple on the water that are fantastic.”

The projects, which Pérez declined to discuss, are in the process of getting approvals, the architects are being selected and the company is working on preliminary plans.

“We have 15 sites that we’ve already acquired that are all just waiting for the right time for us to launch, and they’re all very exciting projects. They’re all iconic in their ways.”