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Post-Bubble

Related Group - No. 38, Florida Trend Private 200
Miami

Icon Brickell
Developer Jorge Perez had to deed two of the three towers at Icon Brickell back to the lender. Ninety-seven percent of buyers walked away from their contracts when the bottom fell out of the market.

Jorge Perez
"You’re now working three times as hard to get one-third of what you want to get."

— Jorge Perez

For a project that was to be his legacy, Icon Brickell is a bittersweet capstone for condo king Jorge Perez. At more than $1 billion to develop, with 1,796 units, the three towers are stylish, a premier property as iconic as its name promises, from the views of Biscayne Bay to the Easter Island-like sculpture garden to a two-acre park and pool 140 feet above the bay. "Icon Brickell, except for the profit to the developer, did exactly what we wanted," Perez says.

That's the bittersweet part. Perez's Related Group deeded two of its Icon towers back to its lenders this year. His financial consolation prize has been serving as the buildings' sales and marketing co-manager (with Fortune International) and keeping ownership of a third 50- story tower that includes a Viceroy hotel. He reports condo units selling at a "rapid pace" at $350 to $450 per square foot. Original prices were more than $600 per square foot.

These days, Related — at 300 employees, half its peak — does property management for 10,000 units and asset workout deals. He sees 10 to 15 proposed asset buys and workouts a week in markets from Florida to Las Vegas. Related still generates "hundreds of millions" in annual revenue, he says. "We're very, very busy. Unfortunately, it's not what you call great busy. You're now working three times as hard to get one-third of what you want to get."

He's returning to his roots with affordable housing rental projects planned for Orlando, West Palm Beach and Miami-Dade. With so many apartment complexes converted to condos in the boom, market-rate apartment developments also are becoming attractive, he says. Meanwhile, he and a foreign investor paid $27.1 million for a controlling interest in a five-acre Fort Lauderdale beach site. He plans a mixed-use project including a hotel. "We'll wait for the market to tell us when it's ready." He has a condo project in Mexico and another there and in Colombia under consideration. He also is looking at a "platform" for middle-income buyers in India.

"If you're in real estate, you have to be pretty stupid not to think there's going to be ups and downs," he says, but he never expected 97% of Icon Brickell buyers to abandon their deposits and walk on their contracts. "I was never about the profit. I'm more attracted to the excitement of doing business and creating the buildings. From that standpoint, it's not as enjoyable as it used to be."

GL Homes of Florida - No. 92, Florida Trend Private 200
Sunrise



"The buyers still want spacious houses, nice furnishings and nice features, and they want it all at a competitive price."

— Jill DiDonna, GL Homes division president
[Photo: Scott Wiseman]

GL Homes division President Jill DiDonna looks at her company's row of model homes from its new sales center at Valencia Reserve, a 700-home project among the farm fields west of Boynton Beach. "Who's building 12 completely furnished models in this economy?" she asks. "I think you would be hard-pressed to find one in the United States."

As competing home builders retreated from the market in the past two years, lightly leveraged and privately owned GL went forward, rolling out new homes and developments such as Valencia, a 55-and-over community concept that the Sunrise-based company has reproduced so often it's like a movie franchise.

GL owes its good fortune to a confluence of factors. After weathering the late 1980s real estate collapse, Israeli immigrant and founder Itchko Ezratti's strategy has been to continue building amenities such as clubhouses and to keep sales centers open to assure existing and potential residents of GL's stability. In some of his markets, as others stopped work, he became the only new-home game in town. Real estate research firm Metrostudy says GL has captured half of the new-home market share in Palm Beach County. "GL is really doing extremely well given the economy and everything else. People are turning up in droves to buy houses," says Brad Hunter, Metrostudy's chief economist and national director of consulting. "They have strong locations. They have strong product that appeals to home buyers. They have a good reputation. They market well."

The company even has managed to sell 60 homes this year in the foreclosure-shrouded Fort Myers market, third nationally in foreclosure filings in August. Buyers primarily came from outside Florida; locals can't sell their existing homes to move. The company has nine developments under way totaling 6,475 houses in Collier, Lee, Hillsborough, Palm Beach and Indian River counties.

Much of Ezratti's holdings had been land-banked at preboom prices. And through onerous contract terms and even a "no investors" banner at a grand opening, he discouraged the speculative buying that hammered other builders when investors walked on contracts.

GL says it's profitable, but it's not disclosing financials. It has taken its lumps. The company made 1,100 sales in 2009, down from 1,800 at the peak. Its employee count is half what it was.

The company has made some adjustments, lowering ceilings or shrinking picture windows but otherwise, DiDonna says, has stuck to what buyers in its price range — the average sale is $413,000 — expect.

Lennar - No. 21, Florida Trend Public 150
Miami

The nation's third-largest home builder isn't talking these days. Spokesman Marshall Ames says Lennar executives are focusing on the business rather than interviews. The numbers speak for them: Lennar directly employed 13,687 at year-end 2005, not counting all the indirect jobs the builder spawned at its projects for subcontractors. Four years later, it employed 3,835. New homes delivered: 49,568 at the peak in 2006 compared with0 11,478 last year. Revenue was down 81% from 2006.

Lennar, which had a combined loss of $3.5 billion in the last three years, has repositioned its product to target first-time buyers and the value conscious. It turned a profit in the latest quarter and has been buying land and distressed assets. Sales traffic is picking up and micro-markets are improving, but the recovery in housing will continue to be a "rocky and sloppy stabilization process," CEO Stuart Miller told analysts in September.

The Villages - No. 35, Florida Trend Private 200
Sumter, Lake, Marion counties

The development, whose 80,000 residents spread over three counties make it a must-stop for politicians, is doing less than half the sales it did at the market peak. But that's still 2,000 homes a year, a pace it has kept for four years. "A great number," says vice president of community relations Gary Lester. Numbering more than 41,000 homes, the development is 10,000 homes from buildout. The age of the average buyer, 62, and the average sales price, $219,880, haven't changed for years.


St. Joe - No. 95, Florida Trend Public 150
Bay County

Florida's second-largest landowner relocated from Jacksonville to be with its massive Panhandle land holdings. In 2005, the company employed 1,230. In February, it was down to 143. Revenue was down 81% last year from 2005, and the company lost $130 million.

Neal Communities
Lakewood Ranch

Neal Communities
Neal Communities' average sales price is $210,000, down from $527,000 in 2005. Pat Neal says the company is profitable again after losing money in 2009. [Photo: Neal Communities]
In 2007, Pat Neal undertook another of the periodic remakes of the Manatee County-based real estate company he's led for 41 years. Originally a builder, then a land developer who sold lots to builders, he was building more and more homes himself. Now, as the previews for real estate looked grim, he decided he needed a lower-priced product.

Today, Neal Communities' average sales price is $210,000. It even sells a 947-sq.-ft., two-bedroom cottage for $110,990, a price point his company hasn't touched since 1989. At the height of the boom in 2005, the company's average price was $527,000.
His remake paid off. Neal says his company is profitable at an "appropriate rate of return" after losing money in 2009. He expects $75 million in home sales revenue this year, down from $115 million in 2005. He says he will beat his 250 sales goal in 2010 and projects selling more than 300 in 2011.

His buyers: In-migrants from the Midwest, retirees, first-time buyers, women and government employees. Missing: Local move-up and move-down buyers. They're stuck in their existing homes.

Neal, fortunately for him, paid cash for land. While he readily admits he overpaid in 2005, he didn't have to worry about a lender-driven credit crisis. As a developer-builder, he has the flexibility to build in less competitive niches. During the boom, he decided he didn't want to face competition some day from investors reselling his homes, so he put in a contract provision discouraging them. It wound up protecting him from investors' bailing on contracts in the bust.

Neal, 61, is buying land — paying an eighth to a sixth of prior values — to be ready for the retirement of 76 million Boomers. "We are going to have plenty of people moving to our state," says the former state senator. "My goal is to be ready for that."


Bonita Bay Group
Bonita Springs

In September, the Bonita Bay Group completed the sale of its TwinEagles property, including two golf courses, to developer Ronto Group and an investment partner for $11 million. The deal is the latest in a series of asset sales since last year that have included the Bonita Bay Club, The Club at Mediterra, Shadow Wood Country Club and The Commons Club, all in an attempt to restructure the company and avoid bankruptcy. Brian Lucas, CEO, says "our expectations are positive but realistic for the coming season." The company is introducing new builders and offerings in three developments. It's also relieved. In August, a circuit judge tossed out a lawsuit brought by the Florida Attorney General's Office over refund practices for resigning club members.