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Chris Rokos, a secretive British hedge fund executive, has paid $8.17 million for a condo-hotel unit in W South Beach.
Rokos, a senior partner in the London-based investment firm Brevan Howard Asset Management, bought penthouse No. 5 in the 2201 Collins Ave. building. His acquisition of the 6,466-square-foot unit is the second-most expensive condo deal in Miami Beach in 2009, according to Miami-Dade records.
New York-based Alex Birkenstock’s $9.9 million purchase of a penthouse at Continuum South Beach in May is the top deal in Miami Beach this year.
Calls to Rokos, 38, at Brevan Howard’s London headquarters were not returned. Rokos’ assistant did not respond to an e-mail.
Rokos, who ranked No. 600 in a British newspaper's list of the wealthiest people in England and Ireland, closed on the all-cash purchase on Oct. 12. The sale was not recorded by Miami-Dade County until last week. The penthouse includes three bedrooms, 3½ bathrooms, three outdoor terraces and a pool, according to the W South Beach Web site.
The London native bought the unit from W South Beach development partnership 2201 Collins Fee, a company led by David Edelstein. W South Beach sales director Cathy Strafaci declined to comment on the sale.
Rokos is the second high-profile buyer of a W South Beach penthouse since July. Professional basketball star Amar’e Stoudemire paid $5.58 million for the 4,841-square-foot penthouse No. 3 on July 10. Stoudemire also paid cash.
The 312-room hotel portion of W South Beach opened July 2. Closings on the 409 residential units began earlier this year. The units were listed from $800,000 to $15 million.
At the time of the Stoudemire deal, about 80 percent of the condo-hotel units were under contract. About 40 units have closed, according to broker Kevin Tomlinson of Esslinger Wooten Maxwell, although only 33 are listed in Miami-Dade County property records.
“It is a struggle for any developer to get any buyer to close,” said Tomlinson, who was not involved in the Rokos deal. “It is especially hard for somebody with a project that is not financeable,” Tomlinson said. Lenders have avoided funding mortgages for properties such as condo-hotels since the onset of the financial crisis and recession.
Project developer Edelstein, principal of Tristar Capital, said in an e-mail that new unit contracts signed in the last two weeks total more than $20 million. Tristar co-owns the hotel with RFR Realty. Edelstein said deals expected to close in the next few weeks total more than $30 million.
“We have experienced a substantial increase in global demand for our units. ... We are projecting more than $100 million in closings by year end,” Edelstein said.
OVERSEAS BUYERS
Tomlinson was not surprised the W South Beach sales staff found a buyer in the United Kingdom. Helped by a weak dollar, much of the interest in Miami Beach condos is coming from Europe, he said. The U.S. dollar has declined 7.1 percent against the euro since the beginning of the year, according to Lydian Private Bank.
Developers of condo projects north of Fifth Street are losing potential international buyers to competing projects south of Fifth, Tomlinson said. Of the 13 most expensive condo sales in Miami Beach this year, 11 were at Apogee South Beach at 800 S. Pointe Drive.
“These buyers typically want to go to the south of Fifth neighborhood, which is doing very well,” he said. “With Apogee, the minimum [asking price] is $3.5 million. That exclusivity attracts the creme de la creme. At Continuum, the minimum buy-in is $650,000.”
CONDO-HOTEL TREND
Condo-hotel projects became popular after the 9/11 terror attacks when financing for conventional hotels dried up. Condo-hotel developers found they could finance construction with deposits from unit buyers.
Condo-hotels developed a bad reputation as would-be unit buyers struggled to find financing during the financial crisis, the real estate downturn depressed prices of all residential properties, and a decline in tourism cut into hotel revenues.Lawsuits against condo-hotel developers spiked as many buyers sought to recover deposits.
“These condo-hotels were touted as a great new form of ownership and investment vehicle,” Tomlinson said. “A lot of people bought these under the assumption that they would be great investments and could be financed. Now the proof is beginning to be seen in the pudding, and all of that is changing.”
Condo-hotels have become an afterthought in a tight lending environment, Tomlinson said. A loosening of the capital markets would not be enough to persuade banks to consider condo-hotel lending.
“Banks don’t even want to finance a condo, let alone a condo-hotel,” he said. “I don’t see it changing with an opening of the credit markets.”
Typically, buyers of condo-hotel properties sign a management deal to put the unit into a rental pool. During the condo boom earlier this decade, condo-hotel managers would require such agreements. But with a dwindling group of prospective condo-hotel buyers, managers have become more flexible.
Rokos could choose to hire an outside broker to rent the unit rather use W's rental program. Starwood Hotels manages the condo-hotel program at W South Beach.
Eric Kalis can be reached at (305) 347-6651. 2201 Collins Ave. photo by A.M. Holt October 29, 2009By: Eric Kalis 2201 Collins Ave.
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