A group of unit owners
at an oceanfront Miami Beach condo building allege that Mast
Capital has dragged out a planned buyout, tying up the
majority of residents and leaving them in limbo, The Real
Deal has learned.
The fallout at Amethyst highlights what can happen when
deals between a major developer and condo owners begin to
sour.
In the two and a half years since developer Camilo Miguel
Jr.’s firm began negotiating with sellers, Mast Capital has
closed on at least seven units at the 11-story, 120-unit
condominium at 5313 Collins Avenue, property records show.
The developer also owns the site next door, where the La
Costa condo building will be torn down to make way for the
Perigon, a luxury condo tower Mast will develop with its
partner, billionaire Barry Sternlicht’s Starwood Capital
Group.
Amethyst unit owners said that Mast Capital planned to close
on a majority of the units in November 2022. Some terminated
leases with their tenants, while others had their furniture
moved, in anticipation of the closing last year.
Mast Capital’s purchase price is roughly $60 million, give
or take, for the property, according to sources. An
affiliate of the firm has so far paid $235,000 to $480,000
for each of the seven units, ranging from about $300 per
square foot to nearly $660 per square foot. All of the units
are one-bedrooms. The developer has spent $2.7 million so
far.
Conflicting information
Mast’s purchase of Amethyst is tied up by a group of condo
owners — originally representing 28 units — that originally
had contracts with Jose Canero of the Canero Group, later
reassigned to Mast. Mast terminated that arrangement late
last year. Those contracts were contingent on each other
closing, meaning if Mast acquired one, it had to acquire all
— a provision that remains in effect for two years after the
cancellation.
Without that group, Mast does not control 80 percent of the
building, which means it would not have the required
percentage to move forward with the condo termination.
According to owners who spoke with TRD and requested
anonymity, the developer exercised extensions, but has not
been clear about when it plans to close.
One owner that was not part of the 28 said Mast had engaged
in “dirty tricks” and had “manufactured issues” that weren’t
serious. Confidentiality clauses in the contracts signed
with Mast prevented the unit owners from acknowledging the
contracts and discussing them.
Some owners fear that Mast won’t be able to close on the
property because of shaky market conditions, and that they
will have missed their window to sell.
Attorney Josh Migdal, who is not involved in the deal, said
the developer likely doesn’t want to cancel contracts,
especially if the sellers are entitled to their deposits.
But if the developer is delayed because it can’t secure the
financing, sellers could be left in the lurch.
Others allege the delays are a tactic, to force the
remaining sellers to come down in price as they face large
expenses tied to maintaining the property and meeting its
60-year recertification in March of next year.
Because of the planned buyout, some owners have stopped
paying their dues, which has put financial pressure on the
association.
“We’re hostage to them,” one owner said. “They want to drain
us into bankruptcy.”
Mast Capital did not answer questions about when it plans to
close, or respond specifically to the allegations owners
made against the company. In a statement, Mast Capital said
it continues to work in “earnest and in good faith with the
Amethyst community, the vast majority of which want to get
this deal done.”
The developer says it remains “confident that we can close
on the remaining units over the coming months.”
Mast’s statement also said that many of the owners who
agreed to sell have told Mast that they are concerned the
building is in “extreme disrepair,” citing two unresolved
unsafe structure violations.
Amethyst, built in 1964, passed its 50-year recertification
in 2014, and the building was considered structurally and
electrically safe for occupation as recently as 2020,
according to a letter from Miami Beach Building Director Ana
Salgueiro that year. It has one open building violation
created in March for water intrusion, according to the city
of Miami Beach.
The Mast Capital affiliate actually received two violations
for units it owns on the third floor. Those violations are
for the unpermitted interior demolition of both units nearly
a year ago. Both violations are still open.
The property is zoned RM-3, which allows for buildings of up
to 200-feet tall along the oceanfront. The property includes
a sliver of land fronting the Intracoastal Waterway that’s
adjacent to land owned by Mast, which was part of La Costa.
Bigger picture
The saga at Amethyst is playing out at older waterfront
properties across South Florida.
Next door, Mast Capital secured the purchase of units from
the majority of owners at the former La Costa building, but
had to go through a court-ordered partition sale to acquire
the remaining ownership interest in the property. That was
finalized this year. By law, most condo associations can be
terminated with support from 80 percent of a condominium,
but 5 percent can block a termination, which is why
developers will often look to secure support of just over 95
percent.
On the site of La Costa, a building that the city declared
unsafe after Mast Capital acquired the majority of units,
Mast and Starwood plan a 17-story, 73-unit condo building.
Asking prices for the units start at just over $4 million
and go up to $37 million for the penthouse.
Developers are interested in aging buildings because they
sit often on the most desired, primarily beachfront, land.
Many of the owners and residents are older and can’t afford
the necessary repairs and rising costs to maintain the
properties because they are on fixed incomes. It can be a
win-win for many — if all goes according to plan.
And even though condo buyouts and terminations aren’t a new
trend, developers have doubled down on their efforts in the
two years since the deadly collapse of Champlain Towers
South in Surfside. New condo safety legislation requires
buildings to have a structural integrity reserve study
completed, which then determines how much a building has to
have in its reserves. It also requires associations to fully
fund their reserves by the start of 2025. The law also
requires that buildings pass inspections, but those were
already required in Miami-Dade County.
That means it has become much more expensive to live in an
older condo, especially with mounting insurance costs.