WORLD PROPERTY CHANNEL ®

(MIAMI BEACH, FL) -- Bulk buyers of luxury Miami Beach condos are swinging for the fences and hitting homeruns these days.

Condo Vultures LLC, a Bal Harbour-based brokerage and real estate research group, reports  buyers of two Miami Beach area oceanfront condo packages are reselling units to individual retail purchasers at a 59 percent premium over the original acquisition price.

Fontainebleau III Ocean Club, Miami Beach

The bulk buyers of a combined 111 units in the Fontainebleau III Ocean Club condominium-hotel project in Miami Beach and the Harbour House condominium in nearby Bal Harbour have retraded 46 units with nearly 48,000 square feet for nearly $22 million.

These buyers -- two separate entities with no known business relationship -- paid a combined $30 million for the two blocks of units with 105,000 square feet. "At this pace, the entire 111-unit package based on square footage has a resale value of more than $48 million," notes Peter Zalewski, a principal at Condo Vultures.

"Every bulk buyer envisions retrading his or her units on an individual basis to purchasers at a premium sometime in the future," says Zalewski. "These two bulk buyers of oceanfront product are proving that this concept can be a reality even in today's market under the right circumstances."

Zalewski says "In the most obvious example of a bulk buyer retrading product," Fountain III LLC members Tony Yaghoubi and Babak Zar sold five of the condo-hotel units in their 10-unit portfolio in the Fountainebleau III for $657 per square foot on the same day they paid a price of $405 per square foot

Peter Zalewski

The Condo Vultures® report was  based on Miami-Dade County records.  Babak Zar is Vice-President, Shazdeh Fashions Inc. in Secaucus, NJ. ...

In total dollars, Fountain III paid $2.9 million for 7,136 square feet of condo-hotel space in the 19-story tower before reselling 3,744 square feet of space for $2.5 million to Orchidea Real Estate US Corp. headed by  Francesco Lanza.

For Fountain III, Zalewski says  this transaction works out to a 62 percent increase on the original price per square foot paid. In total dollars, that is equal to $920,000, according to CondoVultures.com.

For the buyer on the flip, the purchase price of $657 per square foot in Fontainebleau III is still 32 percent below the $960 per square foot price paid on average for similar units that have closed directly above or below, notes Zalewski.

The other bulk buying group retrading units at a premium is HH Condominium Investments LLC headed by  Thomas F. Daly.

Daly's HH Condominium Investments has resold 41 units with 44,000 square feet for $19.3 million in the Harbour House condominium conversion in the wealthy enclave of Bal Harbour.

This price works out to an average price of $437 per square foot on product that Daly's HH Condominium Investments acquired from the Related Group in January 2009 for $277 per square foot, or $27 million.

On a price per door basis, individual buyers are paying an average of $470,000 per unit for product that Daly's entity acquired for $268,000 each in the 16-story oceanfront tower.

"A quick 40 percent premium on a bulk condo investment is impressive, still many buyers of blocks of units want a lot more,  so they are deciding to wait," Zalewski says. "The question becomes, At what price does a bulk buyer retrade the product and move on to the next transaction?"

To date, bulk buyers have completed 13 transactions with a combined 766 units and 866,000 square feet for $195 million. This works out to an average price per foot of $220 per square foot  for product of all qualities and locations, according to the Condo Vultures® Bulk Deals Database.

The buyers of the other 11 closed bulk transactions in South Florida have not yet attempted to retrade their units but are renting them out, Zalewski says.



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