Capri’s buyers are putting in a totally new lobby (right)
Nadim Achi and Miami-based Fort Capital Management purchased 46 units out of a total 69 in the Capri condominium at the end of May with the intent of performing various renovations and then, with a five-year plan, selling the units with an eye toward buyers in New York and Brazil.
In something of a new trend, instead of getting in quickly to flip the units bulk buyers purchase, some investors, like Fort Capital’s Achi, are now performing bulk deals but taking a more patient approach.
“It’s kind of the trend now,” said Peter Zalewski, founder of Condo Vultures. “There’s a commitment of capital by the bulk buyer — it’s different than what you had seen previously, where you buy and then try to resell. Now they buy and wait, and they’re going to be more stringent on the prices they accept.”
Fort Capital paid $31 million for 46 units at the Capri, which is located in South Beach directly on Biscayne Bay, but took a different approach: instead of quickly selling a number of units at a lower value, like was the case at the nearby Caribbean condo in Miami Beach, it intends to put in money on improvements that the original developer, Mark Siffin of Maefield, who built it in 2008, was restricted from doing because of the downturn.
“What we’re looking at is what do people with money, from New York or abroad, want to buy when they’re in Miami. This is for a New York crowd and for the foreigners who come to Miami,” Achi said.
For many Brazilian buyers, even Miami Beach’s high-end properties can be more affordable than cities like Sao Paolo, where prices as high as $1,500 per square foot for luxury real estate can be typical, he said.
The firm spent about nine months negotiating with lender iStar on a deal, finally completing the transaction at the end of May.
“Most [bulk buyers] are just taking these buildings [to flip], like the Caribbean [at 3737 Collins Avenue] where they “fire-saled” it,” said Nelson Gonzalez, senior vice president at EWM who is working on behalf of Fort Capital. “I think their strategy is to get in and get out as quickly as possible. The problem is that once they get in and get out, what are they going to do with the money? There are not many of these projects left — in the middle of South Beach, especially with this view.”
Another problem with the quick-flip strategy, Gonzalez said, was that the highest-level properties tend to sell most quickly, meaning bulk buyers won’t get the highest value for their top level properties.
Fort Capital has hired Miami Beach architect Sam Robin to oversee the renovations, which include a complete overhaul of the building’s lobby, along with landscaping and other changes.
“The work [Robin] has done is tremendous,” Achi said. “For us, if adding that type of work means an additional $10 per square foot investment, you could easily get $30 or $40 per square foot for it. That’s how we’re looking at it.”
The improvements are a new strategy for bulk buyers. But with less and less high-end condo inventory, especially not prime waterfront, Achi is preaching patience and supplemental improvements.
“We’re coming in right now and trying to complete what should have been,” Achi said. “If [Siffin] had been properly funded, he would have done a similar job.
The property includes three separate complexes, with another unique touch: underground parking, unlike the high-rises across Miami which have a block of covered parking before the residential levels begin.
Achi has been working closely with Gonzalez for nearly three years, scouting the area for deals. The firm was nearly handed the deed on the Caribbean until another buyer moved in, but eventually found Capri.
The building also includes a number of so-called “dockominiums,” individually sold boat slips, though they are being sold only to owners in the building for now.
Capri is also notable for having used the French company that dug the Chunnel between England and France to create the building’s underground garage, a rarity in South Florida.
The building, which is located at 1445 16th Street, is comprised of three sections: the Marina Grande, the Marina Piccola and the Ana Capri. The first five units were sold for an average of around $890 per square foot.
The deal closed before the change in the bulk buyer law, which removed successive developer liability. But while that was a consideration, Gonzalez said the quality of the construction made it far less of a potential issue.