Michael Stern, Terra Team Up In $120M Luxury Condo Buyout Deal

JDS Development Group and Terra Group have partnered to buy out a 61-year-old condo tower and the neighboring homeless shelter in Miami Beach.

The pair purchased the site at 1250 West Ave. for about $120M with plans for a luxury waterfront condo tower, The Real Deal reported. The deal was financed with a $98M senior secured loan from Manhattan-based Northwind Group, according to a release.

JDS and its partners acquired more than 95% of the 238-unit Bay Garden Manor condominium at the address, according to Northwind's release. The developers have already secured entitlements for a 330-foot tower with 100 luxury condos on the site, more than twice the allowable height by right.

“Our borrowers have demonstrated exceptional expertise in executing these complex strategies, and Northwind is proud to provide a flexible financing solution combined with certainty of execution for them,” Northwind Group Managing Partner Ran Eliasaf said in a statement. 

Terra, which took an interest in the deal in late July, is one of the partners, as is Gianluca Vacchi’s GV Development and RG Development. A Walker & Dunlop team of Aaron Appel, Keith Kurland, Jonathan Schwartz, Adam Schwartz, Michael Diaz and Sean Bastian represented the developers. Polsinelli’s John Vavas represented Northwind.

“Our team's forward-looking vision for 1250 W. Ave. will showcase the strengths of the neighborhood through the beauty of Biscayne Bay, investments in resiliency improvements, completion of the long-awaited baywalk, and enhanced public space that the surrounding neighborhood will enjoy,” Terra CEO David Martin said in a statement.

“This project will be part of a transformation of an area in Miami Beach yearning for a resilient neighborhood grounded by its residents and upgrades in services, and our team will deliver with that exact approach.”

Dan Marinberg, a broker and attorney who owns Condobuyout.com, negotiated the deal on behalf of the unit owners. He told Bisnow in a phone call that there were unsolicited offers that had come across the unit owners’ desks before, but nothing had come to fruition until 2023.

Marinberg, who owned five units in the building, began exploring condo buyout options, reaching out to owners before additional issues surfaced due to the property’s age, he said.

“Someone needs to quarterback this if this is ever going to get done,” Marinberg said of why he took the lead in the deal.

At first, 10% to 15% of unit owners didn’t want to sell their units, but as condo and reserve fees started to pile up, their minds changed, he said.

After two years of discussion with unit owners and reaching the 95% threshold needed for a termination, he sought potential buyers until the group with the largest stake in the condo building selected Stern and his partners. 

Residents of the condo building can remain in the building for roughly six months before they will be forced to vacate, but the developers still need to terminate the condo association before demolishing the building, TRD reported.

Condo buyouts have proven to be a difficult task for many developers in recent years amid heightened fear of drawn-out litigation. Nevertheless, it is seen as increasingly necessary as associations face expensive condo recertification and reserve funding mandates on older buildings with no clear path to easy terminations.

Bay Garden Manor’s condo association president, Jorge Betancourt, told TRD that developers started to make offers on the building after the Surfside condo collapse in 2021. He said the cost to maintain, repair and insure the condo building was increasingly expensive.

As part of the deal with the city to build the new condo tower, JDS agreed to purchase the Bikini Hostel at 1247 West Ave. JDS offered to build a public park in the structure's place or pay Miami Beach $1.5M, the Miami Herald reported.

Bikini Hostel, situated across the street from Bay Garden Manor, began providing temporary housing for people without homes in November, following the closing of a city shelter. But neighbors soon began to complain they felt unsafe, and Miami Beach officials set their sights on shutting it down.

Miami Beach commissioners approved plans to demolish the building, built in 1958, in June. The shelter closed down in August, forcing out nearly 100 residents, Axios reported.

JDS Development, led by Michael Stern, didn't respond to a request for comment.

Stern is known for projects like the 791-condo Mercedes-Benz Places and the Dolce & Gabbana Residences at 888 Brickell Ave., as well as the skinny supertall on Manhattan's Billionaires' Row, 111 W. 57th St. 

Stern is in litigation with an unidentified person behind an online “smear campaign” accusing him of fraud.

The hunt to unmask the person behind the social media and website accounts under the name JDS Pulse hasn’t gotten much further since Stern's lawsuit. The last action filed in the Miami-Dade County Circuit Court was a notice of intent to subpoena documents from Google, RosettiStarr and Namecheap, according to court records.

UPDATE, SEPT. 8, 2:10 P.M. E.T.: This story has been updated to include attorney and broker Dan Marinberg's involvement in the deal.