Jorge Perez’s $1 Billion ‘Opportunity Fund’
January 28, 2008
Cash is King
At Friday’s ULI Conference Related Group principal Jorge Perez announced plans for a $1 billion “opportunity” fund for the purpose of bailing out troubled buyers and expanding assets. Mr. Perez emphasized the scarcity of prime land and claims that the next upswing, whenever that may be, will involve significantly higher acquisition prices–prices that will make today’s per square foot values seem minimal in comparison. In a market where cash is king, he aims to demonstrate that his crown shines the brightest.
Conflict of Interest?
When asked if he would use the fund to acquire mortgages and units in Related Group projects, he quickly dispelled the notion. He did not disclose the fund’s other partner. He went on to say that the next 8 months will be the toughest for the market as most of the construction units are delivered. Within the last six months the fall out (contract walk outs) for Related Group projects was hovering at around 3%, now he estimates that number to be at around 20% with matters likely to deteriorate before they get better.
The Fall Out
Closings in his most high end developments continue to remain strong. He went on to say that his lower end loft developments have not been hit hard by fall out, but the middle of the road luxury condos were being affected. He said that it’s important that during these difficult months Condominium Associations remain fully funded. His fund will help do just that.
Condo Associations Running Low on Funds
The media has seemed consumed with the high foreclosure rates and the growing fall out, but the negative effect caused by operational budget deficits has been mostly ignored. The problem is that foreclosure units aren’t paying maintenance. In most cases, when the bank forecloses on a unit, the Association takes a loss as most of the outstanding funds cannot be recovered. In the case of fall out, developers are left footing the bill for operational costs of unfilled units. To make matters worse, owners in troubled straits barely affording to pay their mortgages are also less likely to pay maintenance. This has led to widespread amenity cuts and a furthering of financial woes for both unprepared developers and troubled condominium associations.
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1.
perez | January 29, 2008 at 1:00 am
Are maintenance fees and special assessments available on-line?
What is the easiest way to evaluate a condo associations finances? is there any type of grading?
2.
Xavier | January 29, 2008 at 3:02 am
1. Whether paying or viewing assessment information online is available, depends upon the association and management company. Typically, special assessments come with little more than 14 day notices and 45 days notice before paying.
2. You can have the seller provide you with a copy of the most recent association financial statements–that’ll have a breakdown of the budget, profit and loss information, delinquency report, etc. These are official records that an owner can procure within five business days of requesting it. Banks review these as part of determining whether to lend to an association. I suggest a buyer do the same prior to investing in one.
However, in a new construction condo you may have trouble attaining these records because occupancy hasn’t settled and the records are just materializing.
3.
omar herrera | April 21, 2008 at 4:31 pm
wuz ^ kids
4.
Lisa Enright | May 17, 2008 at 1:50 pm
Please buy property at 610 sw tamiami canal Rd. Marked down from 498 thousand to 380 thousand. Lot 50×150 home in good condition.
owner Ella Enright
305-261-5528
5.
RI | May 30, 2008 at 4:59 pm
I was there for that…
6.
Fernando Quintero | June 1, 2008 at 9:22 pm
I saw Mr. Jorge Perez today on Univision, and I am very impress with all the things he has done since he left Colombia. What a successful story to share and mainly how humble of man he is. He makes us proud to be Latino, and Colombian.
Can you tell me he name of the book he just wrote?
Thank you,
fernando_quinter@hotmail.com
7.
FD-Condo-Hotel-South-Beach | June 2, 2008 at 8:31 pm
That’s a long time that for me this will be the first problem: maintenance.
And not only in the new buildings, but also in every old building where you have too many foreclosures or ARM.
If our elected “leaders” were clever, they will vote a law to force the bank to pay the arrears and pay on time. After all, they are the ones who lended th emoney at the beginning and allowed too many people to purchase when they shouldn’t have.
Best regards.
FD @ Condo Hotel South Beach