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.