The Mayor, The Billionaire And The Broker: Miami Trio Including Francis Suarez Offers A Peek At Their Plans
“I'm getting into the real estate business,” announced Joseph DaGrosa, chairman of private equity firm DaGrosa Capital Partners, from the stage at the Mandarin Oriental hotel in Miami Thursday. “I regret the fact that I didn't get into it 25 years ago.”
Somewhat low-key for a Miami billionaire, DaGrosa's business track record includes leading 248 Burger King restaurants out of bankruptcy and selling them to Blackstone, and running a REIT with $900M under management. His name rarely made headlines, except in Europe, where he's made a habit of shopping for soccer teams.
That changed last year, when he made a public splash by bringing on Miami mayor Francis Suarez as senior operating partner at his firm, and donated $150K to a political action committee supporting Suarez’s re-election.
In December, DaGrosa became a partner in International Sales Group after his company took a less than 50% stake in the brokerage firm, and Suarez joined, agreeing to be a member of ISG's board of advisors.
Thursday’s event was held to promote the soon-to-be-released ISG World Miami Report, a snapshot of the market, which ISG co-founder and CEO Craig Studnicky has been compiling since 2009. Suarez opened the event, touting what he considered to be the city's top strengths: professional sports teams; “the lowest tax rate since the 1960s"; safety and security; ”a plan to get the homeless population to zero"; and the annual international art fair Art Basel, which the famously tech-friendly mayor said is “now becoming NFT Basel.”
"We have the ability to grow 10 times," Suarez said. "That is the difference between what's built and what can be built under our zoning code. In New York, that's not the case. In San Francisco, that's not the case."
He added personal tidbits, referring to his life as "fantastical."
“Alex Rodriguez is asking me if I want to work out tomorrow morning," Suarez said. "I sent him my workout. I think he was intimidated."
Within an hour after speaking, Suarez announced he would try to steer $5M raised through a cryptocurrency initiative called MiamiCoin toward rent relief.
Prior to DaGrosa's investment, Studnicky was the sole owner of ISG, where he led project sales for developers for several decades. When a developer needed to hit a certain number of pre-sales before a condo project broke ground, Studnicky got the call, he previously told Bisnow.
Studnicky also runs Related ISG, a traditional brokerage that primarily handles resales of homes and commercial leasing. Studnicky has had a 50/50 partner in this venture with Related Group, run by Miami “condo king” Jorge Perez. They have 400 agents across seven offices.
Studnicky said he was introduced to DaGrosa about five years ago, when "he was trying to buy a bunch of apartments from me,” Studnicky said. By the end of 2019, they had a deal for bulk units in Brickell City Center, but the pandemic caused the deal to fall through.
“I signed up with Joseph DaGrosa,” Studnicky said. “I never thought Mayor Francis Suarez was coming along with us. DaGrosa’s already value-added the whole relationship!”
Studnicky said DaGrosa opened his eyes to the growing connection between Wall Street and real estate. Studnicky was now getting "some Wall Street intelligence and some political intelligence that I never had.” Suarez, a real estate attorney, would never disclose confidential information, Studnicky said, but could discuss “the political winds” and how they are affecting real estate values.
On stage, Studnicky blew through stats on Miami’s real estate boom. He said with so little inventory of single-family houses, people must settle for condos, but will seek three-bedroom units as “the third bedroom is your office" in ongoing remote work environments. He calls condos “vertical houses.”
High-end condos like the Waldorf Astoria, Baccarat, Aria, St. Regis and Aston Martin are under construction all over the city, but more are needed to meet demand, Studnicky said.
Both domestic and international demand are driving the market, Studnicky said. He showed a slide of political leaders in Latin America with left-pointing arrows next to their photos.
“The folks that are calling you, from Peru, from Chile, from Colombia, from Argentina ... They know it's going to get worse. So what you have today is this surging desire in South America to get whatever money they have out of the country, and they're saying, 'Just sell me anything.'“
Although demand is high, the lack of inventory could mean low transaction volume until more units come online, which could be years. That makes it a good time for ISG to invest in Costa Rica.
DaGrosa found that Costa Rica, from an investor perspective, is favorable for lenders.
“We were blown away by how quick and easy it is to perfect a lien on property, which is very important from the perspective of a lender," DaGrosa said on stage. "The process by which you can foreclose, worst-case scenario, is very easy.”
The firm will provide somewhere between $500M and $1B of mortgages over the next three years.
DaGrosa grew up in Yonkers and went to high school in Manhattan before moving to New Jersey. He left for Miami 25 years ago and never looked back.
“Manhattan is a dead city as far as I'm concerned," DaGrosa said. "The quality of life is horrible.”
After the presentation, DaGrosa told Bisnow that although he had been in finance for 35 years and co-founded Quinn Homes, which now has $900M invested in SFR, he regrets missing "some of the biggest opportunities globally and in the field of real estate, which are right in my own backyard." His firm had investments in aviation, healthcare, hospitality and sports.
He was, for a year, chairman and president of soccer team Girondins de Bordeaux, but sold it in 2019, and has flirted with buying other European teams over the past few years. His Kapital Football Group is now "waiting for the market to come to us."
"The French league is still under significant financial pressure" from the pandemic, DaGrosa said. "So I don't think the pendulum has swung to the point yet where it presents a great opportunity. But I think it's just a matter of time. So if the right opportunity comes along, we'll move on it, but we're in no rush to get into the business for the sake of owning a team. We still look at it as a financial investment."
DaGrosa said he has no intention of getting involved with InterMiami, the team led by David Beckham, which is angling to have a stadium complex built in Miami. Stateside, DaGrosa Capital's portfolio includes Soccerex, an events and networking platform. DaGrosa and his son Aleck in 2013 invested in a triathlon company called MultiRace for $1M in cash and a $1.375M promissory note. They were sued by the exiting partner in 2020 after allegedly defaulting on payments and keeping $270K in fees for races that didn’t take place. Per an agreed judgment last April, MultiRace had to pay the ex-partner $1.1M. DaGrosa blamed Covid-19 and said the matter is behind him.
Going forward with ISG, he said "our medium- to long-term plans are to get into the development side of things, and that can be both domestically and internationally. We talked about Costa Rica today. We're talking about some partnerships down there."
He said the mayor wouldn't be involved "in any way, shape or form and anything we might do here in Miami, or for that matter in the state of Florida. We have a very strict mindset, demarcation, in terms of what he might advise on ... We completely agree that anything involving the local government or local development, he's not involved."
At the end of his speech, DaGrosa said he's "very proud and honored to be partners with Mayor Suarez. I believe he is absolutely going places. And I think that on the federal level and specifically Washington, and it's a question of when and not if.”
The comment was reminiscent of a few weeks earlier, when Suarez was at another event, in front of another real estate audience, promoting the under-development Okan Tower that's designed to be the tallest building in Miami.
Suarez said when he first met the project's Turkish developer Bekir Okan, “I was a commissioner. Then I became the mayor. Now I'm president of the U.S. Conference of Mayors. So by the time this building is completed, where am I going to be?"
The audience roared: “The White House!”
