MIAMI, FL - In its second major bulk sale of 2008, the Related Group sold 101 condos in its 457-unit New Harbour House in Bal Harbor for $27 million. The simultaneous transactions were recorded Dec. 31 in Miami-Dade County Circuit Court. Units in the beachfront condo conversion sold for an average of $268,000, or about half of what Related sold 276 units for in 2007.
With the clock ticking on a $173 million mortgage that Related Group's TRG Harbour House signed with Wachovia Bank in late 2006, selling units quickly could be a priority. A Related spokeswoman did not immediately return a call and e-mail for comment.
The buyer is Hollywood-based HH Condominium Investments, which lists former Miami Beach City Manager Christina Cuervo as registered agent and Thomas F. Daly as president. Daly also heads the Miami Beach-based Development Group of South Florida.
The bulk sale was done in conjunction with a first money mortgage in which Related loaned HH Condo Investments $7.27 million, representing about 27 percent of the amount it paid for the 101 units.
The agreement included a price target the borrower would have to meet for each unit to secure a mortgage release from Related. The release totaled $26 million, $1 million less than what HH Condo Investments paid for the units.
With bank funding for bulk condo purchases scarce and appraisals difficult, the financing must have been needed to make the deal in New Harbour House work, Condo Vultures Realty CEO Peter Zalewski said. "The buyer must have had Related in an interesting position and the buyer went in for the kill," he said. "Even if the buyer can't resell them, then their exposure isn't that great because of the mortgage."
Related Group CEO Jorge Perez helped close another bulk deal in one of his buildings last year. He launched a buying fund that made two deals in the 528-unit 50 Biscayne, which Related built in partnership with Atlanta-based Cousins Properties. That bulk deal sold out the project and closed out its loan. The 50 Biscayne buying fund, Lubert-Adler Partners, paid $6.1 million in May for 26 units, an average of $236,294 a unit, and $30.3 million for 120 units, an average of $252,504 a unit.
The two bulk sales are a sign that Related Group wants to get its money out of older projects, even if it means breaking even, and concentrate on its signature projects: Icon Brickell and 500 at Brickell, Zalewski said. "The strategy," he said, "is self-preservation."
Source: South Florida Business Journal