Adam Neumann's Flow, Partners Take Over Chetrit's 4M SF Miami Project
Adam Neumann is expanding his real estate company's footprint in Miami by leading a partnership taking a majority stake in a megaproject along the Miami River from beleaguered New York development firm The Chetrit Group.
Neumann's Flow, in partnership with Israeli real estate firm Canada Global and billionaire Yakir Gabay's Yellowstone Trust, is now lead developer of Chetrit's under-construction, 6-acre River District, which is being renamed Flow on the River, according a release.
The deal has a $525M capitalization, according to Flow's release. Flow will take over the construction of the 54-story, 632-unit apartment tower on the site, which is almost complete, plus a 17-slip marina and 39K SF of commercial and entertainment space.
The site is approved for an additional 2.5M SF of development, including 1,300 residential units, office space, hotels and waterfront retail.
“This is an exciting step forward in reimagining the future of living,” Flow co-founder Adam Neumann said in a statement. “With Flow on the River, we continue to deliver on our mission one community at a time.”
According to documents filed by Canada Global on the Tel Aviv Stock Exchange, translated via Google, the new majority owners paid $106M for a 60% stake in the joint venture, with the Chetrits retaining a nearly 40% stake.
Yellowstone and Canada Global each own 37.8% of the majority ownership venture, while Flow owns 24.4%, according to the filing.
The project was the first in Miami for Chetrit Group, led by brothers Joseph and Meyer Chetrit, which purchased the site at 275 SW Sixth St. in 2014 for $91M. A year later, the developer gained approval for its megaproject with plans for nearly 2,000 units, office, retail and entertainment space, dubbed The River District.
The ball didn’t start rolling until 2022, a year after landing a $310M construction loan from Madison Realty Capital, when they began construction of what was then billed as a $1B project.
Chetrit had fallen behind on debt payments tied to the loan, bringing the unpaid balance to roughly $372M, according to the TASE filings. As part of the recapitalization deal, the partners refinanced the construction loan, according to the filing, which included a $22M payment to the lender.
The refinanced debt on the apartment building now totals $350M, which includes a mezzanine loan, the TASE filing states. The project requires $10M to finish construction and another $10M for the lease-up process.
A spokesperson for Madison Realty Capital didn't immediately respond to Bisnow’s request for comment. A Flow spokesperson declined further comment, and officials with Chetrit Group couldn't be reached for comment.
If Flow does not meet performance goals, Canada Global can hire a new property manager, according to the filing. The Promote first reported that Flow and Gabay are buying into the project.
The Chetrit family has faced increasing pressure on its 16M SF of assets across the country, and as of March, they had defaulted on about $1.6B worth of debt, Crain’s New York Business reported. The company has also faced a handful of lawsuits, including New York City suing it last month over health and safety concerns at a Times Square hotel. Its lender on that project is suing to foreclose on $223M in loans.
Flow has partnered with Canada Global on several projects totaling more than 9M SF and spanning more than just multifamily assets, including an Aventura office building that the JV purchased for $116M in November with plans for three new towers and a 2,300-unit project in El Portal that the partners bought in January.
Neumann’s Flow also owns nearly 30% of Canada Global, according to the company's TASE filings.
Neumann gained fame for his journey with coworking company WeWork, which he co-founded alongside Miguel McKelvey in New York City in 2010. He led it to a meteoric rise, then resigned in ignominy in 2019 before WeWork filed for bankruptcy in 2023.
He launched Flow, which now operates 1,000 rental units in Miami and Fort Lauderdale and expects 466 condo units to come online at Flow House Miami later this year. The company, which is backed by venture capital firm Andreessen Horowitz, also has several holdings in Riyadh, Saudi Arabia.
Sasha Jones contributed reporting to this story.
