Inigo and Diego Ardid banking on Brickell office tower
Key International forecasts office tenant demand from Miami, out-of-state firms
Inigo and Diego Ardid sat at a conference table, looked at an aerial photo of their Ivy and Mint towers in Brickell and reflected on the dark days of the Great Recession.
By the time Lehman Brothers went bankrupt in 2008, Key International, the Ardids’ family firm, had sold about half of the 504 condos at the completed Ivy and had not finished the interior buildout of the adjacent 530-unit Mint in Brickell. Lending came to a halt, property values plummeted, and buyers opted out of contracts.
“It was a complete collapse of the system,” Inigo said. “Nobody wanted to close at that point. Buyers were like, ‘The units are worth less than what I would lose if I just walk away from my deposit.’ It was like catching a falling knife.”
Key finished Mint and sold out both towers after investors led by Starwood Capital Group bought the loan book that included the projects’ debt.
“They started to want to work out the issues with the borrowers that had done a good job,” Inigo said. “We had built the buildings on time, on schedule, on budget.”
The projects marked Key’s debut into large-scale condo development. The strategy was textbook Ardid: Seize on a hot market with enough caution to ride out a possible storm.
Now the family is poised to make a similar play, this time with plans for a 51-story, 750,000-square-foot office tower in Brickell.
South Florida’s office market was supercharged from an influx of businesses starting in late 2020 due to the state’s early pandemic reopening and business-friendly climate. But more recently, the area has felt a sting from remote work, an increase in sublease availability and a slowdown of lease signings from out-of-state firms.
Against this backdrop, Key’s project, called 848 Brickell, would face competition. Three other office towers are in the works nearby, including a supertall by Steve Ross’ Related Companies and Swire Properties, and billionaire hedge funder Ken Griffin’s Citadel headquarters.
848 Brickell is a project that would propel the firm into the stratosphere of real estate, now crowded by a who’s who of developers betting on Brickell. Yet questions loom over its viability.
Their father’s sons
Patriarch Jose Ardid didn’t groom his sons for real estate. But he did raise them to be go-getters.
“You couldn’t be a couch potato,” Inigo, 47, said.
“Sports, being active in something, being part of something,” Diego, 44, added. “If you went out on a Friday night, on Saturday morning there wasn’t sleeping in till 2 p.m. That didn’t exist.”
Jose, now 75, went into real estate in his native Spain, but left the country in the 1970s because of political and economic uncertainty. He also wanted to follow through on his vision for a U.S. business expansion. In South Florida, Jose built up Key with small, risk-averse investments, using mostly his own equity and backing from family and friends.
In 1980, he bought a low-income apartment complex on Miami Beach’s Venetian Causeway and converted it to a luxury 120-unit gated community. A couple of years later, Jose built an eight-story office building in South Miami, and in Brickell, he bought a five-story bayfront apartment building and converted it into a 12-unit condo. Over time he developed a thriving hospitality niche across Florida and Spain.
“If you didn’t know Inigo came from a family business, you would think that he needs the next deal to survive.”
Inigo and Diego found their way to Key International in the early 2000s. Just as the firm was finishing the 224-room Marriott Stanton South Beach, Inigo was trying to figure out his career path. At Jose’s suggestion, he put out feelers for Miami Beach investments and found the development site for Key’s Monte Carlo hotel on Collins Avenue and 65th Street. Diego’s first big deal was the 2005 purchase and financing of the Eden Roc Miami Beach hotel.
After that, the brothers were hooked.
“When you get a big job, it sucks you into the company,” Inigo said.
“It’s your recommendation, your responsibility, you are the one that raised the capital, you are the one that presents to the banks, and at that point … you are tied in,” added Diego.
By 2006, Miami was in the midst of a condo boom. Construction cranes dotted the skyline, lending and sales flowed, and the brothers got in on the action.
“When you get [pre]sales, you are like, ‘Wow, I just sold 500 units.’” Diego said. “Now we can play in these leagues. We already knew hospitality, and my brother said, ‘If I know hospitality, why don’t we just do the same thing on the residential side?’”
While they did survive the bust, the Ardids did not emerge unscathed. In 2009, they handed back a 1.4-acre lot adjacent to the Ivy and Mint to Ocean Bank, which had filed a foreclosure over an $18.5 million land loan.
ST Residential, the Starwood-led investment group that bought Ivy and Mint construction lender Corus Bank’s loan book, provided the last debt tranche Key needed to finish Mint. Because ST bought the loans at a 40 percent discount, it wasn’t an issue that some unit closings came in at less than pre-recession expectations.
“There was a certain number we had to hit for the investors to be happy, but that certainly was not par to what it was before the crash,” said Victor Ballestas, regional director of ST at the time.
From then on, Key, which handles its residential sales in-house, went big on condos. It completed the 98-unit Eden House in Miami Beach in 2013, 230-unit 400 Sunny Isles in Sunny Isles Beach in 2015, Bay Harbor Islands’ 38-unit Sereno and Miami’s 387-unit 1010 Brickell in 2017 and the pair of Harbour towers with 425 units in North Miami Beach in 2018.
In all, the firm’s portfolio holds 10 million square feet of condo and apartment real estate across over 6,000 units, along with $2 billion of hospitality assets under management across more than 3,000 hotel keys, plus commercial investments.
In Florida, Key developed the AC Hotel by Marriott Fort Lauderdale Beach and in Spain, an Only You hotel in Málaga. The firm recently expanded to Lisbon, Portugal, where it is renovating a historic palace into a 116-key Six Senses hotel.
Inigo and Diego officially took the lead in the firm’s day-to-day operations sometime in 2005 or 2006, though Jose remains heavily involved.
In recent years, however, the brothers have become the top brass, while their father has stayed out of the picture — literally.
TurnKey
Since 2022, the family’s media representatives have asked The Real Deal to exclude Jose’s headshot from stories about Key’s projects, saying he has taken a back seat to his sons. Jose also was not present when TRD met with his sons at the firm’s Brickell headquarters.
Inigo and Diego say Jose, who nowadays splits his time between South Florida and Spain, weighs in on major strategic decisions and comes into the office a couple of times a week when he’s in town.
“Every new acquisition we discuss [with Jose],” Diego said. “Or during the architect selection and when we are finding projects. … Or any sale of an asset.”
“Yesterday, we discussed the office tower [848 Brickell] with him because he was in the office all day, and two new acquisitions,” Inigo added.
Over the past 15 years, as Key’s portfolio grew and the firm became more capitalized, it also expanded its partnership pool. Last year, it completed the 32-unit Boca Beach Residences condo in Boca Raton, which had a sellout of $156 million. Miami-based Integra Investments and West Palm Beach-based Wexford Real Estate Investors partnered with Key on the project. And in partnership with Related Companies and Wexford, Key scooped up the West Palm Beach office buildings at 400 and 450 South Australian Avenue for $35 million in 2022.
The firm frequently works with Wexford and Arnaud Karsenti’s Coconut Grove-based 13th Floor Investments, including on most of Key’s condo projects.
“Now we can play in these leagues. We already knew hospitality, and my brother said, ‘If I know hospitality, why don’t we just do the same thing on the residential side?’”
The Ardids’ real estate partners use a variety of accolades to describe them — “quintessential European well-rounded [family],” “classy,” “warm and friendly” and “humble” — but some also called out Inigo’s “intense” nature when it comes to real estate.
“If you didn’t know Inigo came from a family business, you would think that he needs the next deal to survive,” said Karsenti, who first met Inigo in 2011 when both were competing for a distressed note on a Miami Beach building. The two opted to partner and redeveloped the site into Eden House. Inigo “is just hungrier and has more grit than virtually anyone I know in the business. For him, it’s like a favorite sport.”
Not every partnership has worked out.
In 2012, a management agreement between Eden Roc owners Key and a Mexican investor with the then-hotel operator devolved into an ugly dispute. Eden Roc’s owners accused Marriott International and its Renaissance Hotels, which had an agreement to operate the hotel at least through 2030, of running the property like a “poor stepchild” of the brand, according to court filings. The owners invested $240 million to renovate the hotel and build a spa and an adjacent 282-key hotel, but revenue fell far from the pro formas Marriott had presented. Marriott countered in its suit that it contributed $2 million for construction and gave the owners reprieves on fees that were due to Renaissance.
The owners terminated Renaissance’s agreement in 2012, but the brand refused to step down as manager. Court records shed light on what followed: Marriott claimed that Jose and Diego led a management takeover team to the hotel in 2012 with about “50-60 uniformed security officers” that tried to access proprietary Renaissance information. Eden Roc’s owners countered that during their takeover attempt, Renaissance called the police and security from a nearby Marriott-managed hotel, with Jose and Diego being “physically assaulted” in the debacle.
The suits were settled in 2016, with Eden Roc’s owners agreeing to a $10 million payment and three franchise agreements for hotels in Mexico, as well as another $11 million five years later, which could be offset through more franchise agreements. Key has been divesting from the Eden Roc and is now a minority owner.
“Go”
Amid the recent Brickell office boom, high-end office towers scored leases at a new record of well over $100 per square foot, with deals now pushing closer to $200 a foot.
The Ardids took note and last year proposed 848 Brickell. Here’s what they have going in their favor: They can wait for a drop in elevated interest rates because they own the site. (848 Brickell was one of Jose’s early investments, with the existing 13-story building being Key’s headquarters.) Chicago-based Sterling Bay is partnering on the project after the firm and Griffin cut ties on his Brickell tower. Key is targeting 40 percent to 50 percent preleasing before it seeks financing, and could use a capital stack structure that would allow for interest rate swaps.
Critics say it would still be tough. More than 2.7 million square feet of office space is planned for Brickell.
“That’s a lot of space,” said Robert Orban, a Cresa office broker. “I don’t see immediate demand for 1.5 million to 2 million square feet of office space coming to fruition within a year or two years of completion of these projects. They could be looking at a lease-up that could go four to five years after completion.”
Though the Ardids only need a couple of 100,000-square-foot preleases, the pipeline of these large-block tenants has slowed, and Miami generally “has never been a big pre-leasing town,” Orban said. “It’s been more of a ‘build it and they will come.’”
The Ardids are confident in their plan, saying they are getting calls from potential tenants, both new to the market and local.
“Because there are so few offices built, the major tenants are broken up. Some of these tenants have 30,000 square feet there, 40,000 square feet there,” Diego said. “Those people are consolidating. … We are getting those calls.”
Their cautious yet confident approach is rooted in the business values Jose instilled in them.
“I think our father is a big go person,” Inigo said. “And also, don’t overdo it. Make sure you don’t go stupidly and you can’t even hold it on the first bump on the road.”