Q&A with Sergio Rok: Bullish on downtown Miami

 

It has been 30 years since Rok Enterprises started buying property in downtown Miami. Today, President Sergio Rok sees his vision turning into reality as redevelopment has brought more people and business downtown.

Sergio Rok

•  Business: Downtown’s largest commercial property owner

•  Company: Rok Enterprises

•  Title: President

•  Age: 51

•  Portfolio: 26 commercial retail buildings for over 1.5 million-square-feet

Location: 17 in downtown, 9 in other parts of Miami-Dade

•  Lives in: Aventura

•  Hobbies: Playing sports, cars, traveling

Family: Daughter Veronica, 23, and son Jared, 21

•  Civic involvement: Orange Bowl Committee and Dean’s Advisory Board of the FIU Business School

•  Most recent book: ‘The Informant: A True Story’ by Kurt Eichenwald


ewalker@MiamiHerald.com

Sergio Rok’s company is the largest property owner in downtown Miami, but he prefers to fly under the radar.

About the only place you might find him is walking around Flagler Street, which is also known as Natan R. Rok Boulevard, named after his dad, the founder of Rok Enterprises. Sergio Rok still conducts business in much the same way his dad did, dealing directly with each of his approximately 300 tenants.

The company owns 17 buildings downtown, plus another nine in other parts of Miami-Dade County. Some of these properties have been part of the portfolio for more than three decades.

Last year he sold three properties downtown -- only the second time the family has sold any of its downtown assets. Before that, Rok sold only one property five years ago. But Rok said he isn’t looking to cut back his presence downtown.

“Once you stabilize an asset, the upside is limited so you look for a good time to sell,” Rok said.

Rok, who doesn’t usually agree to media interviews, agreed to answer written questions for The Miami Herald.

Here’s what he had to say:

Q. At what point did your family / Rok Enterprises start buying property in downtown Miami and why?

My father opened his first retail men’s clothing store on Flagler Street in the 1960s. He felt comfortable there because downtown Miami’s business environment back then was similar to the one in Havana, Cuba, where he had had a business. He started buying properties in the Central Business District in 1978. We both shared the vision that downtown Miami would someday become an international city.

Q. How did you end up as the largest commercial landlord downtown?

Between 1978 and 1998 we assembled over 20 properties in the CBD. We never really thought about becoming a major commercial landlord. We believed in Miami’s future, so when we saw a good opportunity, we bought.

Q. Why did you decide to sell three properties downtown late last year? Is this part of any broader plan to liquidate assets?

With the retail condominium at 101 East Flagler Street, tenants (Subway and Radio Shack) had long-term leases and the capital gains taxes were increasing in 2013. Flagler Station was sold for primarily the following reason: Sabadell Bank’s lease (anchor tenant) was expiring December 2012 and replacing them would be very difficult. As to the remaining 17 properties I own in the Central Business District, I have no plans to sell any of them.

Q. What kind of investments are you making currently in renovating and upgrading your existing downtown properties?

We are evaluating all our properties. The footprint and location of each one determines what can and can’t be done. We are interested in bringing better retail and more residential.

Q. Where do you see the redevelopment of downtown Miami?

There is more residential than ever, so the population has increased, but national retailers are still holding back. The DDA is working on the Flagler Street Improvement Project, which is critical if we are to attract national chains.We need the city, county and private sector to work together to bring about change. This is a very complex area with a lot of individual owners, and few big parcels. I truly believe in the future of downtown but a lot more needs to be done. It requires planning and patience.

Q. What was your first job?

My first job after college was at a savings and loan in downtown Miami. I did everything from being a teller and an account representative, to working in the back office on accounting and other duties.

Q. In addition to real estate, your family used to own a bank. How did you get into banking?

Our family started buying shares of Transatlantic Bank in 1984, eventually becoming the majority shareholders. From 1984 through 2004, my father and I operated two businesses together, Transatlantic Bank and real estate. I participated in most of the bank’s committees and served as a board of director, but spent more time managing and growing our real estate portfolio. When my father passed away, I stepped up my role to oversee both areas of our business.

Q. Why did you get out of banking?

In November 2005, a bank broker contacted me about a Spanish bank that was interested in buying in the U.S. I was certainly interested in selling the bank as I believed banking was getting more difficult, there was more regulation to come and real estate pricing was out of control. I laid out the terms I would consider, and within a few days, he advised me that the purchaser, Sabadell Bank, had agreed. We executed a definitive agreement within 30 days and the transaction closed May 2006, which was incredible considering the complex approvals required of U.S. and Spanish government entities.

Q. How did you invest the bank proceeds?

I sold Transatlantic Bank in 2006 at the peak of its value. In 2006 and 2007 the stock market reached highs that I felt were unsustainable, so I invested in treasuries. People said I was crazy, but when the economy crashed in 2008 and many investors lost 40 or 50 percent of their wealth, I was happy making 2 percent. I felt the next great opportunity to make money would be buying distressed notes and having the necessary liquidity put me in a very good situation.

Q. Why did you team up with Jimmy Tate to start buying distressed debt and distressed assets?

We have known each other since we were both very young. In 2008, I started focusing on buying distressed debt. Jimmy called me one day and asked if I wanted to go in on a purchase of a Region’s Bank distressed note. We bought 18 properties together over the next four years. His family members handled distressed savings and loans for the RTC in the 1980s, so we have similar real estate and banking backgrounds.

Q. How has your background as a banker helped you during this real estate downturn to spot opportunities among distressed properties?

I was lucky to start out in both banking and real estate. I understood compliance and underwriting issues, and the criteria banks use to classify and refinance debt. Knowing what banks can and cannot do with distressed notes gave me an advantage over some other potential investors early in the recession. The time frame was important, too. My sale of the bank in 2006 gave me the liquidity to buy distressed notes at a time when banks needed to get rid of non-performing loans.

Q. Where do you think we are at in the distressed real estate cycle? Are there any more deals to be had in South Florida or in other parts of the state?

I expect to see a lot of distressed real estate coming due in the next two years, but the pool of purchasers for the notes is much greater than when Jimmy and I started buying them. We don’t chase deals. We only do those that make sense.

Q. Who do you admire as a business person and why?

My father, because of his integrity and his compassion. He dealt with every single tenant, approximately 250, face to face, as I still do. He was a man of his word who didn’t need a contract, and his friends and associates respected him for that. He was humble and treated everyone he met with respect. He truly enjoyed life and taught me to always believe in myself. But nothing made him happier than the time he spent with his family.

Q. What is your involvement in the Rok Family Shul Chabad Downtown Jewish Center and why is this important to you?

Rabbi Chaim Lipskor met my father over 12 years ago and our two families became close. Three years ago, as my family and I were attending High Holiday services in downtown, over 300 people were cramped into a small temporary office space. We decided it was time to create a permanent home for the Jewish community in honor of my mother Rosita and in memory of my father Natan. The Rok Family Shul will be completed in late August 2013. I have been involved in every detail from the purchase of the property to the design, construction and fundraising for the building at 35 SE 9th Street. I hope that when it’s done it will be a beacon of spiritual light in the heart of Downtown.

Q. Most people probably don’t know about your passion for playing competitive flag football. Tell us about it.

I’ve played flag football since I was 21, and last year I was inducted into the Florida Flag Football Hall of Fame. My team was ranked in the top 5 from 1983 through 2000 and we won four national and two world championships. I love the game and I currently play in three different leagues weekly.

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