Over the next two years, Mr. Perez dealt with all of his troubled loans, a process that entailed losing four of his projects – including two of the towers at the Icon Brickell – to lenders, who foreclosed on the assets.
“A lot of developers, mainly because of ego, can’t come to terms with the fact that they are going to lose this property or that property,” said Troy Taylor, president of Algon Group, an investment bank that advised Mr. Perez on the restructuring. “But if you have to chop off the arm to save the rest of the body, that’s what you do.”
Related wrote down $1-billion in losses on soured projects. It slashed half of its roughly two hundred employees and those who remained took a pay cut. At the same time, Mr. Perez said he poured hundreds of millions of dollars of his own fortune back into Related to keep it afloat.
At points, he considered calling it quits – after all, he thought, whatever happened, he had enough money for himself and his family. In 2010, doctors found a tumour the size of a golf ball in his pancreas. It turned out to be benign, but the surgery to remove it involved a long recovery.
“I just couldn’t go out a loser,” Mr. Perez said. “I couldn’t go out a failure.”
Hope From Latin America
Even as Mr. Perez was wrangling with lenders over his own troubled projects, he went on the hunt for distressed assets, recognizing a buying opportunity. “He was buying land and making deals at incredible prices when nobody else was,” said Mr. Ross of Related Cos. One characteristic transaction: a downtown plot purchased for $3-million that is now the site of Apogee Beach, a nearly finished, sold-out condominium tower. The price for such land has since quintupled.
Like elsewhere in the U.S., the catalyst that helped turn the Miami market around was investment money, and in particular, money from wealthy Latin American buyers. While the U.S. economy tanked, a commodity boom was under way in places like Brazil. Such buyers were interested in a safe place to park their cash – for instance, an apartment in Miami that could be rented out, producing a regular return.
So people like Related’s condo chief Mr. Rosso packed their bags and their brochures and began making trips to Brazil, Argentina and Colombia. In the process, they learned a different way of doing business. These potential buyers didn’t blink at the idea of putting down a 40 per cent deposit on a condominium ahead of construction.
Such practices have now become the norm in Miami’s new condominium projects. Before the boom, buyers put down 20-per-cent deposits and Related would borrow upwards of 90 per cent of the cost of a project from banks. The current trend for the company is deposits of around 40 per cent prior to construction, while bank borrowing represents only 30 per cent of the total cost. “It’s a much healthier market as a result,” said Matt Allen, Related’s chief operating officer.
The previous glut of condos is almost gone: Mr. Zalewski of Condo Vultures said that of the 22,000 boom-era units, only 600 remain unsold, and he expects them to be purchased within months.
Related is hiring again and the number of employees is climbing back up toward pre-crisis levels. Mr. Perez has embarked on a deliberate strategy to diversify. He recruited people to head divisions focused on affordable housing and multifamily rentals and expanded internationally, linking up with partners to build projects in Brazil, Panama, Mexico and India.
But he remains the condo king. Last year, Mr. Perez announced a new 382-unit building in Miami’s downtown Brickell neighbourhood with a swanky launch party featuring a parade of Ferraris and Maseratis (Pininfarina, the Italian car design firm, is doing the project’s interiors). “Miami is back!” he shouted, according to a newspaper account.
Back at his home in Coconut Grove, Mr. Perez showed a visitor around his outdoor sculpture garden – he is a major art collector – and talked about his love for food, tennis and Scandinavian mystery novels. A publisher wants him to write a book about the turnaround, but Mr. Perez declined. He is looking forward to doing more things with his family and taking a slight step back from the day-to-day running of the business.
He plans to spend future weekends in a seaside penthouse in Miami Beach with its own rooftop pool. Construction on the ultra-luxury building is due to begin any day. Naturally, it is a Related Group project.
Editor's note: An earlier version of this article incorrectly said Florida real estate mogul Jorge Perez lives in Coral Gables, Florida. In fact, he lives in in Coconut Grove, a neighbourhood in Miami.