With the national real estate market in full-recovery mode, South Florida developers Jimmy Tate and Sergio Rok are selling the distressed properties they snapped up across the Southeast during the recession.
In the summer and early fall, Tate and Rok sold two of their last remaining major assets: a 512,000-square-foot shopping center in Hoover, Alabama, and a 228-unit apartment complex in Mandeville, Louisiana. Tate and Rok bought the shopping center in 2010 for $45 million. Also in on the deal was local mega-developer Jorge Pérez of the Related Group. After an extensive renovation, the property sold for $83.5 million in September to a national commercial real estate company.
“Jimmy Tate has a great nose for a distressed deal,” said Related chairman and CEO Pérez. The trio bought a total of about $600 million worth of distressed real estate from banks desperately looking to unload properties after the market crashed.
Tate said he and Rok banked on a quick recovery.
Tate had seen the killing made by buyers who snapped up distressed bank-owned properties after the savings and loan crisis of the late ’80s. (Tate’s father Stanley was involved in the federal Resolution Trust Corporation which sold off properties and mortgage loans held by failed savings and loan associations.)
$109.25 millionValue of real estate sold this summer by Rok and Tate
This time he wanted in on the action. His company, Tate Capital, formed a partnership with Rok Enterprises and later brought in Related.
“Even in the depths of the recession, we knew the U.S. was going to resurface faster than anybody else and that investors would want to put their money in American real estate,” Tate said. (Tate’s brother Ken is also a co-owner of Tate Capital.)
The apartment complex in Mandeville, just across Lake Pontchartrain from New Orleans, represented another good piece of business.
The partners were able to buy it for $17 million in 2009 and unload it for $25.75 million in June, about $119,000 per apartment. (Related was not part of the deal.)
We knew the U.S. was going to resurface faster than anybody else.
Jimmy Tate, developer
They have also sold properties in Tennessee and South Carolina, as well as in Homestead, Coral Springs and the Omni Center in downtown Miami.
Jack McCabe, a real estate analyst based in Deerfield Beach, said that Tate, Rok and Pérez took a big risk investing in markets outside the “safe zones” of New York, California and Florida.
“Every hedge fund and high-net-worth individual wanted to buy in South Florida [during the recession],” McCabe said. “But there was less competition in those kind of secondary markets, which were slower to come back, so the prices were low.”
Said McCabe: “It paid off.”