Miami developer ready to put $1 billion fund to work

By Jim Loney

MIAMI (Reuters) - Miami condo builder Jorge Perez, who recently formed a $1 billion vulture fund to take advantage of weak U.S. real estate prices, expects south Florida's overbuilt housing market to stabilize in two to three years.

Perez, billionaire chief executive of privately held The Related Group, a big south Florida developer, said the fund he formed in mid-February with private equity firm Lubert-Adler of Philadelphia is ready to soak up excess condominiums with the aim of holding them for two to five years.

"I think we will see equilibrium in south Florida in two to three years and prices start moving up thereafter," Perez said in an interview with Reuters on Thursday at the opening of The Plaza, a two-tower condo in Miami's Brickell banking district.

"I would say we would start seeing profitability from these positions in year three," he said.

Miami's condo market has been considered one of the most overpriced and overbuilt in the United States. Although the median price for Miami condos rose last year, analysts say prices have tumbled 25 percent or more in some areas of the city.

A recent S&P/Case-Shiller report said Miami's single-family home prices declined 17.5 percent last year, the largest drop among 20 major U.S. metropolitan areas.

Some analysts expect the coming months to bring the largest drops because thousands of Miami condo units are being finished and preconstruction buyers will be asked to close, or will be forced to walk away from their deposits.

The Related Financial fund will buy raw land and debt in addition to large blocks of apartments, and already has six contracts in place, Perez said. Staff is still being hired.