What's the Deal | Isaac Toledano & BH Group | $47.5M Pompano Beach Development Site

➡️ Market: Pompano Beach
➡️ Address: 20 North Ocean Boulevard
➡️ Acquisition Price: $47,500,000
➡️ Property Type: Mixed Use Development Site
➡️ Project Size: 3.7 Acres
➡️ Buyers: BH Group, Related Group
➡️ Seller: Chetrit Group

What drew you to this development site?

Until about five years ago, Pompano Beach was a sleepy town. No one got excited when you told them you had an oceanfront site in Pompano Beach but over the last few years, waves of new residents and visitors have flooded the area following the pandemic. There were a few successful developments including two projects from the Related Group and the Ritz-Carlton Residences by Edgardo Defortuna. The Ritz project got very high prices per square foot and performed amazingly. The developer should pay between 2-4% of the gross proceeds on the project. For example, if your project is 300,000 sellable square feet, multiplied by $2,000 per square foot, it’s worth $600,000,000. That means on this project you should pay between $12,000,000 and $24,000,000 for the site. No one could imagine that Pompano would get brands such as Waldorf or Ritz-Carlton but the area is now getting massive attention. I contacted the seller of this lot while the deal was off-market and brought the Related Group as partners. Now we’re the proud owners of close to 4 acres right on the ocean. When you look at areas such as Dade, Broward, or Palm Beach counties there are almost no oceanfront sites available. If there are sites available, then the prices don’t make sense or the zoning and development rights don’t make any sense. We were lucky to buy this property with approved development rights. I’m under a confidentiality agreement right now but there is a strong brand behind us for this residential project. We’re planning to launch sales in the fourth quarter of this year.

What’s the benefit of doing a branded residence?

Branded residences have become very attractive in the last 5 years because everybody, no matter what their price range is, wants white glove service at their home. They want a private concierge, amenities, and the feeling that you’re staying in a hotel the whole year. Several hotel chains saw this opportunity over the last 10 years and you’re seeing strong brands pop up throughout Miami and other major markets across the country. Unfortunately, not a lot of brands are available since they’re already present in South Florida but the strategy is working exceptionally well and I believe it’s here to stay long term.

How did you secure financing for the site?

My wife and I have a relationship with Centennial Bank after doing a lot of business with them. They’re very smart and very aggressive which makes them compatible with our transactions and business philosophy. Every time you’re offering a capable lender a quality site with quality sponsors you’ll get their attention. They know the market extremely well and we caught their attention with this particular deal. We got great terms on the loan and closed within roughly 2 months. For context, land deals generally close in 120 days or even 360 days. We like to move fast and stay aggressive to get an edge on our competition. Typically land deals are 50-60% leveraged and the interest terms are SOFR plus a spread. The credit of the borrower and the risk profile of the specific deal are some of the most important factors when an institution considers providing a loan.

Who are the key partners or collaborators involved in this deal?

We are collaborating with the Related Group on this transaction. We’ve worked with the Perez family for close to 12 years now many transactions completed and many more in the pipeline. They are sophisticated and transparent which makes transactions smooth and efficient. We have a great relationship with Jorge, JP, and Nick. We bring them value by finding off-market deals and when I bring them deals sometimes it takes less than an hour to move forward. We have an existing JV agreement in place with them and as new projects surface, we change some small details and are ready to move forward since our relationship is long-running. You have to remember that trust and relationships are everything in this business and that rapport isn’t built overnight

What are BH Group’s investment criteria?

We’re very focused in Dade, Broward, and Palm Beach Counties which our equity partners appreciate. We have a narrow focus and are knowledgeable in these markets. We are currently working on an oceanfront site that we are looking to close in the next 90 days which I can't yet announce. It’s on the west coast where you can sell condos starting at 30 million dollars and up. We purchased the last oceanfront site for development and will hopefully announce it in the next few months. We pay up for unique locations with a great story which gives us the potential to capture more development rights. No one else can duplicate sites like these so when we see an opportunity we know how to attack and close these transactions. We’ve closed on deals in 5 days which is unheard of but is one of our competitive advantages in this market.

How did your real estate career begin?

I arrived in the United States in 1999 and started working as a mortgage broker for a company in Miami. They told me when I went for an interview that they would give me an opportunity but wouldn’t let me take applications for 6 months. I had a heavy Israeli accent and had trouble with spelling and grammar. After working at the mortgage company for 2 years I realized I loved the real estate industry and after making a nice amount of money I bought an apartment complex in Hollywood, a commercial complex in Hallendale, then 2 more buildings in North Miami. I was very fortunate and made a lot of money working on thousands of units in the mid 2000’s. We used to buy rental communities and convert them to condos. Then 2008 came and the world was melting but we were able to make a strong comeback. When a lot of other families are on vacation or relaxing I’m working. My wife works with me and between her involvement in the business and raising the 8 kids we have together, it’s not an easy job. I’m blessed and fortunate, that we’re all healthy and able to work hard. Hopefully, we’ll continue to work for many years. People ask me about my retirement plans and I tell them I want to die healthy at 90 years old in the office and for them to take me straight from the office to the cemetery.

What’s advice to young professionals starting in commercial real estate?

Hard work pays off. Everyone repeats the same sentence but I’m telling you that in the real world, this is the right thing to do. You have to be focused, dedicated, and stay loyal to yourself and your family. Don’t flip-flop, if you choose brokerage, development, or mortgages stick to it and I’m sure you’ll be successful. Surround yourself with honest people who will always work with you and give you good advice. In the end, if you work hard and stay consistent I know you’ll see results.

Omar Morales’ experience working with Isaac:

I want to emphasize that Isaac stands out from other investors. I’ve worked on deals where everyone is trying to nickel and dime each other which breaks down trust but Isaac thinks long-term. He has established relationships over years of hard work where he rounds up in his partner's favor as opposed to squeezing every penny out of a deal. We’re always excited to work with Isaac because we know exactly what we are going to get. Last year my team and I closed nearly $200 million with Isaac across multiple high-profile transactions. A $50 million deal with Isaac tends to be smoother and drama-free compared to smaller $5 million deals where other investors take more than they give. Thanks to Isaac's strong team and high ethical standards, you won't have to pull your hair out in frustration. With Isaac, you always know what you’re going to get: prompt feedback and certainty.

Traded Student Ambassador Program

This interview was conducted through Traded's Student Ambassador Program in collaboration with Thomas DeRuvo of Rutgers University and Omar Morales of Berkadia. Omar has closed over $3.3 billion of land and multifamily transactions across South Florida. Follow @OmarMora1es on Twitter and Instagram and subscribe to Omar’s newsletter for insights and opportunities in the South Florida market.

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