Gables / Winter 2004
By Larry Luxner
Edgardo Defortuna is aptly named.
The 47-year-old Argentine native, who lives in Key Biscayne and drives a 2003 Bentley, has become one of the most successful and wealthiest developers in Miami-Dade County.
Defortuna is president and CEO of Fortune International, whose 2003 revenues are expected to reach $1.5 billion, up from $1 billion the year before.
Among its most visible projects is the $250 million Jade Residences at Brickell Bay, a 48-story tower rising just off Brickell Avenue. When completed in late 2004, it'll have 326 units boasting an average 1,700 square feet apiece. Apartments in the new tower will start at $500,000 for a 1,100-square-foot, one-bedroom unit, rising to over $5 million for a 10,000-square-foot, five-bedroom penthouse.
"Jade is much more expensive than most buildings in the Gables," he told us in a recent interview. "International buyers usually look for the waterfront, and the Gables with very few exceptions cannot provide that."
The Defortuna empire has offices in Buenos Aires and Mexico City, and subsidiaries and exclusive relationships in 28 cities across Latin America, including a branch in San Juan, Puerto Rico.
In fact, much of Defortuna's success stems from his uncanny ability to tap into the Latin American mentality especially when it comes to buying property in South Florida.
"When I first came here in 1980, there were a lot of kidnappings going on [back home], said Defortuna, who was born in Buenos Aires but raised in Córdoba.
"My father had a power transformer factory, and my idea was to go back and work for him, but I liked the lifestyle and energy Miami had, and so for both economic and safety reasons, I decided to stay."
While working toward his MBA at the University of Miami, Defortuna managed some of his father's real-estate investments in Miami, "and I noticed that many Latin Americans had the same problems as my parents: that the typical U.S. real-estate company didn't really understand their needs and philosophies."
Defortuna, interviewed at Jade's sleek two-story headquarters on 1300 Brickell Avenue, explained that at that time, it was dangerous for Latin Americans to talk about their U.S. investments; it was also difficult for them to deal with potential problems such as renting the units in their absence.
"Nobody was providing that type of service," he said. "Also, when they were buying or selling something, financing was relatively complicated because in many cases they couldn't provide verification of their income. A few banks did understand this and provided loans for foreign buyers, but it wasn't as popular as today. So these people would stay for two weeks, maybe a month, and if they found that buying real-estate was too complicated, they'd abandon the effort. So we came up with a company that specialized in one-stop shopping for foreigners."
The real-estate side of Fortune International helped along by a big development boom that hit Miami in the early 1990s started out in 1983 with 10 agents working out of one office on Brickell Avenue. Twenty years later, the company employs 470 brokers at 12 offices in Key Biscayne, Coral Gables, Miami Beach, Aventura, Sunny Isles and elsewhere.
Fortune Development, which has 100 employees, deals with the company's own projects, and handles marketing and sales of projects for third parties.
Defortuna owns the development side of the business, and shares ownership of the real-estate side with his brother, Walter, and sister, Monica.
Asked why Brickell which has attracted some $3 billion worth of real-estate invesment has become so popular, Defortuna says: "It's the business center of the city, and it's becoming the Manhattan of the South. Obviously, all the banks are here, most of the major technology companies are here, and it's conveniently located close to all the residential areas, and 15 minutes from the heart of Miami Beach."
"We have a number of buyers who have decided to leave their houses in Kendall and opt for condominiums closer to where they work, especially driving down U.S. 1."
Between 1990 and 2000, Brickell's population jumped 35.2%, according to the demographic firm Claritas Inc. Close to 54% of the area's residents are of Hispanic origin, and they enjoy an average annual income of $63,483.
But it taken awhile for Latin Americans even wealthy ones to learn how to buy and sell property in this country.
"I always try to teach them how to buy and negotiate discounts in the United States," Defortuna said. "In the early '80s, if someone was asking $300,000 for an apartment, they'd offer $150,000. They they're more sophisticated, and they know that a reasonable discount might be 5-10%, but not half the asking price."
Even so, he says, "many prospective Latin buyers also think that if you pay cash, you should get a bigger discount than if you finance it. Obviously, with the ability of financing here and the seller receiving 100% of their selling price, it doesn't really make any difference."
Defortuna, who in April 2003 was featured on the cover of Poder magazine, says his market fluctuates from one year to the next.
"At the beginning, when I started, Venezuela and Argentina were probably my two biggest customers, then for awhile Brazil was No. 1. Today, our biggest base of customers is Mexico, followed by Colombia, Venezuela and Argentina."
He said the Mexicans are especially important to the high-end luxury market.
"If the economies down there are doing well, you see the migration of capital to the U.S. to put it in a safe place. If it's not doing so well, it also affects Miami because they're using their capital to run their businesses. And if there are potential political problems, there's a peak on investment in Miami because people are afraid or feel they need to leave."
In 2001, a group led by Defortuna turned around the bankrupt Miami Beach Mason Paco Rabanne tower, buying up the remaining units for $143 per square foot. He renamed the project the Grand View and sold the units for anverage of $250 per square foot.
These days, one-bedroom apartments in the Brickell area rent from $1,500 to $2,500, while two-bedroom units go for $1,800 to $3,500 and up, depending on how luxurious the building is. Apartments for sale generally command $300 to $500 per square foot.
Interestingly, close to 60% of Jade's buyers are of Latin origin, said Defortuna, and 40% of these Latins plan to use the condos as their second home.
"We've been very methodical about analyzing the plans and the needs of the potential consumer before starting, and we were very careful about making sure everything was approved," said Defortuna, noting that the general contractor, Pavarini Construction, "is one of the largest and most competent" contractors in Miami-Dade County.
Jade is built on 2.5 acres of land at 1295 Brickell Bay Drive that Defortuna and his fellow investors bought for $19 million from Multiplan USA, a subsidiary of Brazil's Grupo Multiplan. It's located across the bay from Brickell Key, where Swire developed Tequesta Point condominium towers and the Mandarin Oriental Hotel.
Amenities include nine-foot-high ceilings in tower residences and 18-foot ceilings in bay lofts. Also planned are cabanas overlooking the bay, a full-service business facility and a 10,000-square-foot recreation area to include a European spa and fitness center.
Fortune International is developing the site together with a unit of Hong Kong-based Swire Properties Ltd., which brings "substantial equity" and experience to the deal. HSBC is the primary lender, funding a good deal of the project's construction costs.
In mid-December, Defortuna began selling units in a new project known as Jade Beach. Located at 170th Street and Collins Avenue in Sunny Isles, the 55-story tower is situated on a 2.5-acre parcel of land that includes 300 feet of oceanfront property. The land alone cost Defortuna's company $25.5 million.
"It's going to be very, very high-end, similar in look to the Jade project on Brickell, but with more of a feeling of a beach resort atmosphere," he said. "We have had a tremendous interest from prospective buyers, and they're just waiting for us to begin the reservation process."
Units at Jade Beach will start at $500,000, going up to $1.5 million. One, two, three and four-bedroom apartments will be available.
Defortuna said these units are too expensive for the typical retiree.
"I don't think the same type of people who buy on Brickell will buy on the beach," he said. "Here, there are lots of young professional businesspeople from Latin America who spend substantial amounts of time in Miami. I expect Jade Beach to be somewhat the same, but more oriented towards vacation living."
Another Sunny Isles project, this one at 187th Street and Collins Avenue, is a condo-hotel project known as M Resort Residences. The project, consisting of 210 units in a 22-story building, involves an investment of $75 million.
"We sell all the units, and the unit owner uses it when he's here, and when he's not here, he gives it to the hotel management," said Defortuna, explaining that the concept has nothing to do with time-sharing.
Finally, Defortuna has poured $15 million into the purchase of 1110 Brickell Avenue. The 10-story building will be converted into 60 office units totaling 100,000 square feet of available space.
"Most of the time, you can't buy your own office. You have to rent, because office buildings are usually owned by large pension funds and financial institutions," he said. "Focusing on the Latin American market, many Latins are used to owning their own office space, so we felt that selling office space on a partial-ownership basis along Brickell Avenue would be a very good business."
While Defortuna has confined his real-estate and development activities to Miami-Dade County, that may soon change.
"Land is getting a lot harder to come by, and a lot of developers including ourselves are looking north for opportunities, meaning Palm Beach and Orlando," he said. "As long as the economy remains the same with low interest rates, we'll continue to see a big boom, because in comparative terms, Florida is still a lot cheaper than New York, Chicago or Los Angeles."
Someday, says Defortuna, his company might also start looking further south to Cuba.
"I think that could be a tremendous market opportunity," he said. "Obviously, if the situation down there changes, we would seriously analyze and be prepared to participate in the rebuilding and modernization of Cuba."