Four months after the catastrophic collapse of Champlain Towers South, powerhouse developer Related Group is exploring a takeover of its two sister buildings — potentially setting up a messy fight between the developer and unit owners.
Related has made offers to unit owners at both Champlain Towers North and Champlain Towers East, according to documents obtained by the Miami Herald and sources familiar with the conversations.
“I represent the Related Group in their purchase of Champlain North,” real estate broker Mario Borda wrote in an Oct. 19 email to one unit owner, Pauline Frankfurt. Borda said in his email that he understood Frankfurt had not received an offer letter he sent via FedEx.
“Not interested. Thank you,” Frankfurt replied.
The offer letters at the North tower came from PRH Champlain North Acquisition LLC, an affiliate of the Related Group that was incorporated in Florida on Oct. 13.
There are roughly 200 units across the two buildings. Related, the largest condo developer in South Florida, would almost certainly seek to tear down the buildings and replace them with new luxury towers.
A spokesperson for Related Group declined to comment Wednesday. Borda also declined to comment.
Ruby Issaev, who moved to Champlain North from Champlain South with her husband about six years ago, said she recently had an offer letter slid under her door. But she doesn’t want to leave, she said, reflecting the concerns of several residents interviewed by the Herald.
“This is my home and we worked so hard to get this apartment,” Issaev said. “We were very hopeful that this would be our last place to live.”
Under Florida law, developers can dissolve a condo association if 80% of unit owners agree to terminate and less than 5% actively dissent. Those details can also vary depending on a condo board’s original documents.
In an offer letter obtained by the Herald, Related said the buyouts at the North tower would only take effect if more than 95% of owners agreed to sell.
‘The building is safe’
The effort by Related Group may be at least partially a response to safety concerns after the Champlain Towers South collapse, which killed 98 people.
The North tower, which is north of the collapse site, mirrors the South tower in its age and L-shape design, though inspectors have so far said they believe the building is safe. The condo board has retained an engineer as it moves toward its mandated 40-year recertification, a process that can result in six-figure assessments on unit owners.
“At this time, we are not complete with our investigations, but we are confident that the building is safe to be inhabited,” engineer Youssef Hachem wrote in a Sept. 27 letter to Naum Lusky, board president.
The adjacent East tower was built more than a decade later, in 1994, by the same developers but with a different design.
Eric Glazer, a Fort Lauderdale attorney who specializes in condo law, said Related seems to be seizing on owners’ fears of being unable to sell their units because the buildings are now “tainted” by the Champlain name.
“It’s no coincidence that they focused on the other two Champlain Towers buildings,” Glazer said. “They know those people are sitting there thinking their unit is unsellable because of their name.”
Related Group, he said, can present itself as a “knight in shining armor” offering to buy.
“Depending on the price they’re offering, they may be right,” Glazer said.
For Lewis Seigel, who owns a unit in Champlain North, now might be the time to get out. Seigel, who lives in Portland, Oregon, inherited the unit from his father and rents it out.
His tenant left the building after Champlain Towers South collapsed but returned after inspectors said the North complex was stable. Related, he said, is offering a price 30% above his unit’s market value.
“Frankly, if I have an opportunity to get that big bundle, I’d be very tempted,” Seigel said.
Related and other Miami developers have sought to take over numerous oceanfront condos in recent years. In August, Related and Two Roads Development were nearing a deal to buy out the 15-story, 88-unit Carlton Terrace in Bal Harbour and replace it with a luxury condo tower.
Glazer, the condo law attorney, said that trend is only likely to accelerate as state lawmakers crack down on safety requirements for condos.
“The Florida Legislature this year is [likely] going to make it more expensive to live in a condo,” he said, pointing to the possibility of more stringent recertification rules and concerns about a law that lets condo boards circumvent cash reserve requirements.
Condo associations facing expensive repairs may choose to simply sell out rather than pay up, opening new doors for developers like Related across waterfront neighborhoods in South Florida, said Jonathan Miller, a real estate analyst.
“Grappling with a tragic event like this, a seminal moment. It has changed the way we look at certain properties,” Miller said.
Condo terminations can get ugly. In Sunny Isles Beach, a dispute among unit owners at the former Seashore Club condos has dragged on for eight years in court after Related and Dezer Development bought out the two-story complex to make way for the 56-story, oceanfront Armani/Casa tower.
And in Miami Beach, a developer who bought out most unit owners at La Costa — which was evacuated in August for failure to make needed repairs — is now suing a group of holdouts to force them to sell their units.
At Champlain Towers North, several longtime residents are reluctant to sell.
“Where am I going to go?” asked Eli Budwick. “Where am I going to find an apartment this size with the ocean in back of me for less than $2 million? It doesn’t happen today.”
Few expressed concerns about the building’s safety.
“The inspectors say everything is fine. They drilled every floor, every column,” said unit owner Julia Portugal.
Portugal rents her unit out now but hopes her children will live there one day. Related’s $1.13 million offer for her unit — a two-bedroom oceanfront condo valued at $667,800 by the Miami-Dade Property Appraiser’s Office — isn’t swaying her.
“It’s not about the money. I love the building. I love the area,” Portugal said. “The whole idea of Surfside is the feel of a small town in a big-town setting. It’s a unique area.”
“Are they targeting us because of Champlain South? It’s very concerning,” she added. “They are hoping people are scared.”