Developers of Privé at Island Estates in Aventura have been locked in a battle with homeowners who oppose the development and the installation of sidewalks, and the resulting delay by the city in issuing building permits. After months of litigation, the developers last week began to build their sidewalk, despite physical intervention from nearby residents. And after a judge ruled last week that the sidewalk is there to stay, the developers — BH3 and Gary Cohen — say they are moving forward with their project.
A trial is scheduled to begin later this month, and Susan Raffanello, attorney for the homeowners on Island Estates said the dispute is ongoing.
“Importantly, the District Court of Appeals did not rule on whether Privé is trespassing; it just remanded the case so that Privé has an opportunity to argue why stopping its ongoing trespass causes it damage,” Raffanello said in a statement. “Citizens of Aventura will be watching closely to see if the city actually issues a building permit to a developer who is so blatantly trampling on the private property rights of his neighbors. This case is far from over. A private developer cannot simply steal property from others. That is a fundamental principal of American property rights.”
BH3’s principal Dan Lebensohn sat down with TRD to discuss Privé, how he got his start in real estate and why he enjoys working on complicated projects.
You had mentioned that the trespassing action was a fraternity prank. Can you elaborate?
I’m qualified to say that because I was in a fraternity. You have a group of people who said ‘we want the sidewalk; we just don’t want it on our property.’ But there’s an easement for it. They alleged that it was a trespass. They asked the city to give them time to understand the logistics of the sidewalk.
We said, ‘no problem. We’ll have a town hall meeting, which we had.’ They used that time to prepare the action.
They’ve been gaming the system. They’ve been playing both sides of the fence. We ran out of patience. I just think they didn’t realize there are consequences aside from slowing down our project and attempting to prevent us from building.
We intend to build our building.
If you were to start the process all over again, would you do anything different?
Yes. Of course I would. I would buy all of the houses on the south island. I would have attempted to buy all of the houses on the south island and build a very cool development. That’s a very interesting point. It’s not a joke. The homes on the south island are built on the same rights [developer Gary] Cohen’s family had from the 70’s — the same vested rights we plan to build on.
How much of your time is spent on Privé?
I spend a lot of time on this project — litigation and otherwise. We have ongoing sales, ongoing interior design. We have a variety of other deals going on in Florida and New York.
In New York, we have a few buckets. Right now, we’re continuing to produce a portfolio of multifamily apartment buildings, which is at the core of where I started in the business. We add managerial value and generally working the buildings to grow the rents in an organic way.
More recently, we’ve picked up a development site in New York which will be mixed use near the Barclay Center in Brooklyn. That’s a project we’re actively working on.
How did you get into real estate?
I started as an attorney. I saw practicing law as a pathway to get into the real estate business. I didn’t have the capital or resources and I didn’t have enough experience. I practiced all real estate related transactional work. It was always the guy who was buying the buildings that was most intriguing to me.
For my first project, I bought a property near Yale over the telephone without seeing it in person. I managed to restructure and come in with very little capital. I was able to triple my money over six months. That was my first taste.
In South Florida?
Terra Beachside Villas [at 3000 Collins Avenue]. It was 117 condominiums that were in foreclosure. The project was about 70 percent complete when we came in. We partnered with the developer. We sold units during the foreclosure process. There were a host of mechanics’ liens and a lot of title issues. It’s a good example of a complicated deal that we’re drawn to. There’s a fire and everyone runs out of the building. We’re the ones running in. That’s our mentality.
Charlie Sieger of Sieger Suarez Architects was the developer [on Terra Beachside]. We brought them in to finish. Fast forward, Sieger Suarez is our architect on Privé.
Rendering of Privé at Island Estates
How are sales for Privé?
We have about 72 units under contract, roughly $190 million in sales and $50 million in deposits.
How has the litigation cut into your profit margin?
There’s no question that the time delays cost money. Of course, sales have been damaged by it. We reserved 77 units back in the day. We lost half of those and built back to 72 contracts. If this wasn’t all going on, we would have been sold out. The broker network, which we know well and has entrusted deals to us and brought their customers to us, a large portion has kept their distance. It’s cost us absolutely. Construction costs have gone up historically in South Florida.
We lost a $140 million construction loan during the fourth quarter of last year. Having that gives comfort to the buyer pool, to the community. We’ll have to replace that with a new lender. That cost is to be determined.
How were you involved in the sale of 4000 Alton Road in October?
It was a foreclosure of the Rohr Talmudic University on Alton Road. We were approached by someone who asked if we wanted to buy a piece of debt — a yeshiva. I went to yeshiva as a kid, and whether it’s a yeshiva or a church, I like making money but that’s not a comfort zone for us. The guy persisted, so we talked to the rabbi. We were able to figure out a way to facilitate their purpose, alleviate their debt — they were in foreclosure from BB&T Bank — and figure out how to make a profit for us. Others had tried and we were able to achieve it. We bought the $5.34 million debt from BB&T and immediately stopped foreclosure proceedings.
The southern portion of their property is an underutilized parking lot. We detached the properties but kept them connected to preserve parking requirements and so on. With that, we created a development parcel but kept his development intact. We helped him redesign his building, which he’s now raising money for, and we wiped out his debt. We sold the development site next door to Mast Capital.
We also contacted the Department of Transportation and bought a few sliver lots from them, added to the air rights and added value to the property.