'Bargains' at $1 Million a Unit?
Jean Francois Roy deals only with the hottest of hot properties and has developed a niche for acquiring underused sites and turning them into luxury condo towers.In the superheated world of Florida real estate, Roy (pronounced Wah) deals only with the hottest of hot properties -- oceanfront land. His Boca Raton-based private investment company, Ocean Land Investments, has developed a niche of acquiring tired old beachfront motels and other underused sites in Palm Beach, Broward and Miami-Dade counties and turning them into luxury condo towers.
A recent deal: In 1999, Roy bought the Days Inn Hotel on North Ocean Drive on Singer Island in Palm Beach County for $5.8 million. Last year, he sold the nine-acre property to Catalfumo Construction and Development for $30.5 million. Roy remains a limited partner and will share in profits on the project. Two 27-story condominium towers are planned for the site, which boasts 375 feet of beachfront. Unit prices range from $1.5 million to more than $3 million, and each will feature a private elevator, 10-foot ceilings and views of both the ocean and Intracoastal Waterway. Forty percent of the units presold without even a brochure, says Dan Catalfumo, president of the construction firm, based in Palm Beach Gardens.
Roy moved to south Florida from his native Quebec in the late 1980s, drawn, he says, by a love of boating -- and lower taxes. In Quebec, he had developed retirement and nursing homes after working as an accountant. Roy had already amassed a bundle by the time he came south. Ensconced in a home on Fisher Island with a fine boat, he thought of retiring young. But his penchant for the arduous -- reflected in a love of mountain climbing and marathons -- reasserted itself. Joined by Pierre Martin, executive vice president of Ocean Land, Roy began buying up old beachfront properties. One such purchase was the Riviera, a 1950s-vintage, two-story motel on A1A in Hallandale Beach that became an 18-story, 233-unit condo building completed in 2003.
Roy, 50 and now an American citizen, applies his French-Canadian accent and considerable charm mostly to the grunt work of development -- the process of securing approvals from zoning officials, planning authorities, neighborhood associations and even turtle protectors. He then teams up with a builder to handle the glamour end of the business -- building and sales. Typically, Ocean Land provides equity to help the developer obtain construction funding and stays on as a partner. "We rarely sell a property," Roy says.
The Evolution of an Oceanfront Deal
Jean Francois Roy bought this Days Inn site on Singer Island in 1999 for $5.8 million.Five years later, Roy sold the nine-acre parcel for $30.5 million.Two 27-story residential towers are planned for the site. Condo prices will start at $1.5 million.
Jorge Perez, chairman and CEO of Miami-based Related Group, which has partnered with Roy on the Riviera project and at least a half-dozen others, says Roy "knew before anybody the value of tying up oceanfront locations when we didn't see the value over the years. He has a great eye for sites."
Roy's charms don't always win the day. In 1998, he bought a dilapidated commercial property on the beachfront in Boca Raton. The two-acre site, he thought, was ideal for a Ritz-Carlton hotel, adding that the hotel chain was onboard with the plan. But his ideas exceeded height limits, and the city nixed the project. He later proposed an apartment and retail complex and other permutations but was similarly rebuffed. Meanwhile, city citations for a barrage of code violations cost him a $100,000 fine.
"We turned the page," says Roy, who sold the property in 2003 to another company that settled for a more modest project. "It was a good lesson in humility: My own hometown, and they shut the door in my face."
Roy doesn't have to turn that page often. Many of his investor partners in Europe and North America have stuck with him for years, through multiple projects. "He's very farsighted," says Jack Freeman, a London-based investor who has known Roy since 1979. "And he's totally dangerous. He's a charmer, and he uses that in business."
One of Roy's latest deals even required a nod from the Vatican. Last fall, Roy agreed to pay $96 million for a 6.6-acre parking lot at Mercy Hospital in Miami's Coconut Grove area. Ocean Land, with The Related Group, hopes to erect three towers designed by Miami's Arquitectonica on the hospital site. The 300-unit luxury condominium complex would average 3,500 square feet per unit with prices starting at about $1.5 million. The hospital had to petition the Congregation for the Religious in Rome to OK the proposed sale.
Disarmingly, Roy likes to muse on the taste for high risk that he says is required to develop on the ocean. "I'm always asking myself why I'm doing this," he says. He apparently knows the answer to his own question: In the same breath, he unfolds a spreadsheet on the desk of his ocean-view office, displaying some 30 redevelopment projects he is stewarding through various stages from acquisition talks to the final delivery of condo units to owners.
Despite the growing perception that south Florida's condo bubble is about to burst -- and his own concerns about the growing cost of oceanfront land -- Roy insists that the limited inventory of buildable parcels on the ocean will insulate the oceanfront market. "For $1 million, you can still buy a very nice condo on the ocean," he says. "This is an extremely big bargain."