Miami-based Condo.com founder Richard Swerdlow and South Florida developer Bruce Goldstein are partnering to launch an online platform for bulk condo deals, The Real Deal has learned. They’re betting on the growing distress of condo markets across the country and developers’ desire to keep their offers confidential.
Swerdlow and Goldstein are rolling out their nationwide website, BulkCondoDeals.com, so that developers and other sellers can post their bulk deals – defined as more than one condo unit – on the site with detailed financial information. That will include annual cash flow, fixed costs, cap rates, discounts, building information and projected returns.
However, the listings will exclude building names and addresses, so that developers won’t compete with their own existing retail inventory. The venture will act as a broker for the deal, taking commissions ranging from 1 percent to 5 percent, co-founder Swerdlow said.
The veiled listings will also allow sellers to “avoid the appearance of distress to the financial markets,” while offering discounts of up to 50 percent, said Goldstein, partner and CEO of Miami-based Bulk Condo Deals. The discounts aren’t available to end users, and the goal is to appeal to bulk buyers.
“This does not negatively impact the retail buyer, nor would he take advantage of it,” Goldstein, a former hotel and condo developer, said. “It’s a totally different mindset.”
The website has about $100 million worth of listings and about $500 million in the pipeline in major U.S. markets, as well as in Latin America. Live listings include an 85-unit bulk condo in Miami and a 185-unit condo deal in Chicago, and the partners plan to list a deal in New York City.
They said that amid the pandemic, there’s an oversupply of investors looking to purchase discounted deals.
Condo.com brokered deals in the last recession as a lead generator for other brokerages that had listings, but its website didn’t provide sellers with confidentiality, and it did not focus on helping investors analyze deals, Swerdlow said. (Condo.com provides weekly condo data to TRD.)
Swerdlow and Goldstein said their goal this time is to help sell remaining condo inventory so that developers can move on to their next projects. At first, they planned to launch a consumer-facing platform for developers to sell directly to consumers, but the pandemic accelerated the existing distress in the market. Now, they say they are looking to appeal directly to funds, insurance companies, family officers, and other institutional investors.
Developers appear more motivated than before the pandemic to move on. During the past six-plus months they have offered a number of incentives to prospective buyers, including furniture packages, covering homeowners association fees, and offering rental income on empty units.
One Sotheby’s International Realty broker Fernando de Nuñez y Lugones said that some condo projects have been in the works for six years or more, and it’s time for developers to get rid of their inventory. “It’s a quiet and silent way of distributing this without hurting the retail sales,” he said.
Peter Zalewski, principal at Condo Vultures Realty and a bulk condo investor, said that the 50 percent deposit structure in effect this cycle has forced buyers in the Miami market to close on their units, leaving fewer bulk opportunities this time around.
Swerdlow and Goldstein expect distress to accelerate as the pandemic continues. Developers will need to sell in bulk to avoid having their property foreclosed on or having their loans enter special servicing. Once distressed pricing becomes public, retail sales can fall apart.
“The last thing they want is the broker to have access — and blast it to the media,” Swerdlow said.