The fate of the $1 billion ICON Brickell will be settled in about 30 days. Who will ultimately become the owner is still to be decided.
BY MONICA HATCHER
Speculation is intensifying about the fate of the ICON Brickell condominium, the $1 billion crown jewel of Miami condo developer Jorge Perez.
Perez, chairman and chief executive of Miami-based Related Group, said he was in the final stage of negotiations with lenders regarding the future of the troubled three-tower project and that no decision had been made about who would own the 1,800-unit luxury development in the 400 block of Brickell Avenue.
In an interview Wednesday night, Perez denied statements appearing in a Wall Street Journal story in which he said the company would likely be relinquishing ownership of ICON to Bank of America and HSBC, the project's main lenders.
“What I did say was that we were in discussions with the banks and we do not know and I cannot comment if we will be turning over the project to the lenders or not. That is still something that has yet to be decided, but it could end up in a number of possibilities,'' Perez said, adding a decision should be made in 30 days.
Analysts, however, have predicted Perez would lose ownership after delivering the opulent ICON, which features an infinity pool the size of a football field, in one of the worst housing markets in South Florida history.
Over the past year, troubled developers behind on construction loans have been turning over title to projects in so-called “friendly foreclosures'' to avoid costly and lengthy litigation.
Should Perez pursue a similar exit strategy for ICON, it would likely mirror a July deal in which Related surrendered ownership of the new 420-unit CityPlace South Tower in West Palm Beach to a group of partners led by Toronto-based Scotia Capital.
In the deal, Perez paid out an undisclosed amount of cash to absolve himself of any personal guarantees. Many developers put up guarantees for loans, putting their personal fortunes on the line if things go south. At CityPlace, the company also negotiated a management contract for the property as well as the exclusive right to sell the remaining units.
“It would not be surprising to see him try and utilize this as an exit strategy in all his remaining projects,'' said Jack McCabe, a real estate consultant in Deerfield Beach.
“If he did, he would have the best exit strategy of any of the condo developers. What he would have done is made himself a billionaire, changed the skyline of Miami, put his mark on it and removed himself from the possibility of losing it all, which has happened to so many other condo developers,'' McCabe said.
Perez was short on details about negotiations with the banks, but said he hoped they would concluded amicably. Worst-case alternatives could be a bankruptcy, foreclosure or a protracted court battle. “We've been trying for nine months to work out a friendly agreement with the bank that will not put the building under bankruptcy or anything negative, and that can include us working with the lender to turn it over or for them to ask us not to turn it over,'' Perez said.
Regardless, Perez said, “Whatever happens, I developed, I created ICON Brickell — that is mine and it will always be mine in that sense.''
The wrinkle in the ICON saga comes a little more than a month after Related won approval from its lenders to slash prices by 30 percent in a bid to get buyers to close. Project lenders also agreed to start making five-year loans to buyers.
Since then, Related has closed about 100 sales in a project of nearly 1,800 units, which are now listed at an average of $410 a square foot, down from the $650s. Alicia Cervera, president of Related Cervera Realty Services, the company's sales arm, said 150 more units were expected to close shortly.
As long as Related is involved, Cervera said whatever decision was made it would be seamless and “the best thing for the asset and the best thing for the buyers.''