For more than two decades, Property Markets Group has been a Manhattan real estate developer. And it still is, with marquee projects in the works like 111 West 57th Street, which is set to become one of the tallest residential towers in the Big Apple.
These days, however, a growing share of PMG’s attention is trained on Miami’s red-hot market.
“Just in this [real estate] cycle, Miami has gone to super-city status,” Kevin Maloney, founder and chief executive officer of Property Markets Group, said. “I can’t imagine what the downtown will be like in five years. The growth in Miami has been so much more than in New York City.”
Thanks, in no small part, to PMG.
The closely held company, founded in 1991, has $6billion in real estate projects, according to Maloney. PMG is developing six projects in South Florida with an estimated sellout value of about $2 billion and has eight projects in New York with a $4 billion sellout value. It also is developing a portfolio of rental apartments in Chicago and acquiring existing rental units there.
Some recent milestones:
▪ In September, PMG and its partner, S2 Development, obtained a $167.6 million construction loan for Muse, an ultra-luxury condo tower in Sunny Isles Beach that will soar 47 stories and house just 64 units, each of which will get a sculpture by Albanian-born artist Helidon Xhixha.
▪ In October, the developer topped off construction at two projects — Echo Aventura, a 190-unit luxury condominium in Aventura, and Sage Beach, a 24-unit condo directly on the ocean on Hollywood beach.
▪ Also in October, PMG obtained a $124million construction loan for Echo Brickell, a 57-story luxury condo, and broke ground on the 180-unit tower at 1451 Brickell Ave. Units in Echo Brickell are selling at an average of $1,100 a square foot — far above the typical projects going up in the fast-changing neighborhood.
▪ On Nov. 7, PMG closed on the $80million purchase of 300-330 Biscayne Blvd., a premier 2.05-acre site. The property has approvals for two super-tall towers with very high density, and it is one of the last prime bayfront sites in downtown Miami.
“We’re probably at $2 billion in work in South Florida and we probably have $6 billion in projects in total in the planning stages and being completed,” Maloney said. “The company is very, very busy.”
The latest acquisition, which was formerly known as the Empire World Towers site, includes vacant land and an empty office building. It was the subject of a court-ordered auction that, according to HFF, the commercial brokerage that handled the sale, generated more than 10 bids.
HFF marketed the site on behalf of a trust benefiting CDR Créances S.A.S., a French government entity overseeing the assets of a failed bank. CDR Créances fought a protracted court battle to take the property from Maurice Cohen and his son, Leon Cohen, who were accused of absconding with loan funds from a failed French bank.
The Cohens were convicted of tax evasion and sentenced to prison.
PMG scrambled to line up financing for the large purchase on Biscayne Boulevard and obtained a 30-day extension to a 60-day time frame set for closing the sale. “It was a challenge,” Maloney said.
PMG raised equity for the deal from a group of investors and obtained a loan from New York-based Fortress Credit Co. LLC.
Maloney said PMG has flexibility on what to do with the coveted bayfront site, which is across from Bayfront Park and in the heart of downtown, which is undergoing a major makeover.
Options include developing two super towers — a condominium and a rental high-rise— or developing a single tower and selling part of the expansive site.
“We’d like to create a condo and a rental, but people are asking us to sell one of the back pads,” he said.
If PMG sells a parcel on the west side of its L-shaped site, it would lower its costs and the company would move ahead with the development of one tower on the bayfront, he said.
“We’re looking to build something tall, because that makes it more interesting. We’re drawing schematics,” said Maloney, a tall, lean man with a penchant for tall buildings.
“Ultimately, the FAA will decide” how tall the project can soar, he said. Building heights in the area are subject to Federal Aviation Administration approval, because of the proximity to Miami International Airport.
PMG, like other developers, is drawn to Miami’s condo boom in part by the Latin American deposit model that has shaped the current cycle.
Condo developers require big deposits from unit buyers — typically asking for 50 percent of a unit’s purchase price to be paid in increments during construction. Developers say the financing model helps ward off speculators and incents unit buyers to close on deals.
But the deposits also provide cheap funding for construction. While New York apartments still command higher prices than those in Miami, for developers, “the returns and multiples in Miami are higher than in New York, because of the use of buyer deposits,” Maloney said. “The equity requirements are lower.”
As PMG is establishing a track record in South Florida, it has put a lot of emphasis on building business relationships. When the company finds a partner that it works well with, it tends to tap them again for future projects.
In South Florida, PMG for instance, has repeatedly turned to Uruguayan architect Carlos Ott to design its projects. “I like working with him,” said Ryan Shear, a principal at PMG who oversees its Florida projects.
International Sales Group, the Aventura sales and marketing firm led by principals Craig S. Studnicky and Philip J. Spiegelman, heads preconstruction condominium sales for PMG’s South Florida projects. And John Moriarty & Associates, whose Florida operations are headed by executive vice president John Leete, is its go-to firm for general contracting in the region.
Luis Flores, a partner at the Miami law offices of Arnstein & Lehr LLP, who has handled PMG’s land acquisition and financing deals in South Florida, said PMG’s executives are aggressive in finding development sites and have been creative in financing deals.
“They clearly have an impetus to get unobstructed water views,” Flores said.
Maloney, 55, is a private pilot who sometimes ferries himself between Miami and New York in his private plane. He was a real estate banker before getting into development.
Aside from the obvious potential for reaping big profits, Maloney said he is drawn to real estate development because of the variety it offers.
“You get to do everything: You can stick your nose into design and architecture, engineering, finance, construction, sales, marketing,” Maloney said. “It’s a very interesting job.”
PMG has an entrepreneurial culture and encourages and rewards employees for independent thinking and taking ownership of their work. “Everyone has tremendous latitude to do their job. There’s not a hierarchy of reporting. There’s just a lot of meetings,” Maloney said.
“I don’t know of another company where everyone is so financially incentivized,” said Shear, a Miami native who joined PMG in 2006 and rose to the position of principal. “Either in ownership or through the bonus structure, everyone is tied into the success of the project.”
PMG’s Miami office also has a lot of young professionals. Shear, who is 31, said many colleagues in Miami also are about his age.
In the midst of all its development activity, PMG recently moved its Miami offices from Aventura to the Four Seasons tower at 1441 Brickell Ave., significantly expanding its space to 6,500 square feet, including a sales center. Maloney’s office overlooks the Echo Brickell construction site.
Looking down from his office, Maloney said: “With what’s in the pipeline — if we do nothing else — we’ll be busy for the next five years.”