Getting to the Brickell party early paid off big time for Rockpoint.
The bustling mixed-use downtown neighborhood has become one of the key beneficiaries of the “we’re moving to Miami” craze. It’s attracting blue-chip real estate investors from New York such as Stephen Ross and Michael Stern, as well as foreign firms such as Israel’s Gazit Globe and Mexican developer Menesse Condos. All that activity means that Rockpoint – which has had a foothold in Brickell since at least 2012, when it bought distressed land along with Jorge Pérez’s Related Group – thinks it’s time to cash in.
This month, Rockpoint sold the Shops at Mary Brickell Village, a 200,000-square foot retail hotspot, for $216 million to New York-based real estate investment trust RPT Realty. The price, penciling out to $1,080 per square foot, is nearly double the $113.5 million Rockpoint paid Ivanhoé Cambridge for the property in 2015.
And that bonanza wasn’t a one-off: Last month, Rockpoint found an eager buyer – Bloomberg tied the purchasing entity on it and another record land deal to hedge fund mogul Ken Griffin’s Citadel – for its office tower at 1221 Brickell. In 2017, Rockpoint had bought it from Blackstone Group, splashing down what at the time was considered a steep $155 million, or $380 per square foot, for the 28-story, 408,000-square–foot Class A building. But the new buyer’s purchase price of $286.5 million – just over $700 per square foot – more than vindicated Rockpoint.
When the real estate private equity firm, headquartered in Boston and run by Keith Gelb and Bill Walton, began ramping up in Brickell, the area was already on the upswing, as were other prime parts of Miami. But few could have predicted just how handsomely Brickell would benefit from the pandemic-induced migration to South Florida.
“It’s very difficult to predict when you have these meteoric rises like you have had in the last couple of years,” said William Kramer, a real estate attorney at Brinkley Morgan in Fort Lauderdale. “Unless they just have some brilliant real estate analyst, there is definitely an element of luck.”
Rockpoint declined to comment for this story.
As an income tax-free state, Florida has always attracted companies and residents from high-tax states such as California and New York. Federal tax changes in 2017 made it even more alluring, Kramer said. And South Florida’s “open for business” attitude during the pandemic gave companies the confidence to sign a flurry of leases, which in turn incentivized developers to kick off new projects.
Brickell is coveted but it’s also relatively small. There are few remaining development parcels, which keeps prices up. The low-interest rate environment of the past two years also helped drive higher property valuations, said Ken H. Johnson, a real estate economist at Florida Atlantic University.
“It’s very much good timing,” said Johnson, but it wasn’t just that: Rockpoint put in the work and money to reposition both 1221 Brickell and Mary Brickell Village, said JLL’s Manny De Zárraga.
“There was a significant amount of capital invested,” he said.
And while it’s enjoying the spoils of those two deals, Rockpoint is far from done with the area. It’s the equity behind Mast Capital’s 850-unit, two-tower apartment project off of South Miami Avenue and 14th Street. The partners paid $103 million for the land at 1420 South Miami Avenue in December, where Mast is also building 400 condos.