The Real Deal Miami

Prying inside Alex Sapir’s real estate empire

The fiercely private head of Sapir Corp. is expanding the development firm’s foothold in Miami, after having long focused on New York
By Katherine Kallergis |
Research by Chava Gourarie
September 10, 2018 03:30PM

Alex Sapir and his properties (Credit: Getty Images, iStock)

UPDATED, Sept. 13, 6:15 p.m.: Last June, Alex Sapir’s ASRR Capital announced plans to build a 1.7 million-square-foot mixed-use development in Miami’s Arts & Entertainment District, in what would be the real estate mogul’s biggest South Florida investment to date.

The Miami 18 project would add to the portfolio Sapir’s firm was building in the city, to go with other developments like a smaller luxury boutique condo building planned for Surfside. Miami 18 called for two towers, one 60 stories the other 40 stories, with up to 1,200 rental units, 20,000 square feet of retail space and 350,000 square feet of office space.

Now called Sapir Corp. — the publicly-traded firm’s name since April — has mostly focused its development efforts in New York, but has begun a bigger push into Miami. Appearing to confirm his commitment to the city, Alex Sapir in the spring purchased a $17 million waterfront home in Miami Beach’s Venetian Islands. The company’s investment in the Magic City is among Sapir’s recent strategy shifts after tightening his grip and boosting his ownership in the Israel-based organizaton.

In an email response to questions for this story, Sapir said he expects to invest more in South Florida over the next few years, citing the recent changes in tax legislation. Those changes make it less expensive — and in some cases, profitable — for ultra-wealthy out-of-state buyers to establish residency in Florida to avoid paying more in taxes. “Sapir Corp. will continue to make strategic investments with strategic partners and capital,” he wrote. He declined to provide specific information about his recent investment moves or his long-term vision for the company.

But South Florida is in his sights. Sapir’s 16-unit luxury condo called Arte by Antonio Citterio, recently topped out and is expected to open early next year. The 12-story Arte will feature an outdoor pool, indoor lap pool, a spa and fitness center, a tennis court, residents’ lounge and air conditioned parking. The building at 8995 Collins Avenue adds to the wave of new development in the once-sleepy beachfront town. Sapir Corp. owns 62.5 percent of the project. The total amount of equity invested in Arte totals $50.7 million, including $40 million for the oceanfront site. The developer also secured $90 million in construction financing. Sales are expected to launch in September, with Corcoran Sunshine handling them.

The gambler

The construction is something of a gamble for Sapir. To break even on the $150 million investment, Arte would have to sell its 80,000 square feet of condos for $1,875 per square foot.

Unlike most new condo developments in South Florida, Sapir is launching sales when construction is nearly completed, and did not rely on buyers’ deposits for construction. Over on Fisher Island, developer Heinrich von Hanau did the same thing when he launched sales of Palazzo Della Luna about a year away from delivering the luxury condo building.

That’s not the only gamble. The Miami 18 project encountered a hiccup when investment partners CNMB International — a Chinese construction company — and Hong Kong-based G-Resources said they wanted to sell their stake in the project. Neither firm appears to have exited the deal for the site at 18th Street and Northeast Second Avenue, which they teamed up for buy for $33 million. It is now valued at $51 million.

In August 2017, then-ASRR revealed it was in advanced talks to pay $6.1 million for Eyal Ben-Yosef’s 12.5 percent stake in the Surfside development. ASRR originally partnered with Turkish-based Suzer Group. But Ben-Yosef bought 33 percent of Suzer’s stake in the Surfside project, along with a planned condo conversion at 218 Madison Avenue in Manhattan early last year.

Sapir, Ben-Yosef and Tzachi Hagag of the Hagag Group planned to work on another project at 8800 Collins Avenue in Surfside, but that deal fell through.

C-suite shuffle

Sapir Corp.’s recent wave of activity has also included at the executive level. Over the past year, the CEO and at least three directors have departed, including Rosen, who was also his business partner. Danny Avidan stepped down as CEO in June, about 10 months after selling of his shares to Sapir. Avidan was replaced by Baruch Yitzchak, who had been acting CEO of El-Ad Holdings, a private real estate investment company controlled by Israeli billionaire Isaac Tshuva. Avidan will continue as deputy CEO with the same salary. He could not be reached for comment.

Mor Nardia and Chanan Elituv exited, while Rueven Spiegel and Stephane Farouze came in.

Sapir has since bought out Rosen’s share in the firm. Rosen’s departure left Sapir with an 80.5 percent share of the company.

Rosen, who is Sapir’s brother-in-law, maintains investments with Sapir, including restaurants in New York, Las Vegas and Miami. Rosen declined to comment.

Sapir, who is in his late 30s, purchased ASSR in 2014 with Rotem Rosen following the death of his father, Tamir Sapir, in September 2014. Tamir Sapir, a fertilizer and oil billionaire from the former Soviet republic of Georgia, founded the Sapir Organization in New York in the early 1990s.

Just two months after Tamir Sapir died, ASRR made a number of big moves in Manhattan. It bought back the ground lease under 110 Church Street, also known as 50 Murray Street, and 53 Park Place — both high-end residential buildings — for a combined $231 million. The following year, the firm and its minority partner CIM Group sold the iconic 11 Madison Avenue to SL Green Realty for $2.6 billion. Sapir paid $675 million for the 30-story office tower in 2003.

Last year, Sapir Corp. sold six properties in Baltimore with the Harbor Group for a combined $247 million, while acquiring one for $33 million. According to documents filed with the Tel Aviv Stock Exchange, the company’s net income was about $14.9 million in 2017. Its total revenue by the end of 2017 was about $19.4 million,  according to the documents.

As of June, Sapir Corp. appeared to be losing money. The company’s revenue for the first six months of the year was about $3.2 million, and it was $6.4 million in debt. Its total current assets were worth about $159 million.

In April, Sapir bought out his partner Gerard Guez’s stake in the NoMo Soho hotel at 9 Crosby Street in New York, a 264-room property that’s valued at more than $246 million.

At the same time, Sapir took on Guez as a partner in Sapir Corp. Guez, a fashion industry executive and founder of the popular Buddha Bar nightclub, traded his 49-percent ownership stake in the hotel for 9.2 million shares of Sapir Corp. Valued at around $34 million, the stake came out to a 26.1 percent ownership in Sapir Corp.

In a statement at the time, Guez said he believes “we will be able to create a lot of added value to all shareholders and deliver on Alex’s vision of creating a well-balanced portfolio of assets.” Guez, chairman and CEO of Los Angeles-based Sunrise Brands, has an option to buy to an additional 2.8 million shares in Sapir Corp. within two years, according to documents filed with TASE. He can also appoint a director to the board.

Alex Sapir is fiercely private about his personal life in addition to his business, and Guez is among the few people who responded to interview requests about their business dealings. Even so, he chose his words carefully.

The deal to sell his shares in the Nomo property in exchange for shares in Sapir Corp. was an easy decision, Guez said. Simply, he said, they work well together. It’s “something that came naturally.”

An earlier version of this story incorrectly stated that Alex Sapir inherited ASRR Capital from his father, the firm’s stake in Arte, the date that Danny Avidan transitioned from CEO to deputy CEO, and misrepresented directors who recently joined the Sapir Corp.  This story has also been updated to include other net revenue.