Miami

Indefatigable billionaire Jorge Pérez is angling to profit in part from the condominium woes of indefatigable billionaire Jorge Pérez.

Mr. Pérez is chairman and chief executive of Related Group, the biggest condo developer in south Florida, and perhaps the greatest optimist in brazenly overbuilt Miami. Having borrowed more than $1 billion to erect soaring towers in downtown Miami, he is scrambling to sell thousands of condos amid the deepest market swoon in decades.

Building and Buying in Miami

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See details on some of Related's condos in Miami.

Yet the 59-year-old entrepreneur -- a fast talker whose marketing flair evokes comparisons to Donald Trump -- also has emerged as one of the most aggressive buyers of condos on the cheap, starting with units in one of his own buildings.

An investment fund formed by Related and Philadelphia private-equity firm Lubert-Adler Partners LP recently snapped up $100 million of Florida condos in five projects. More than one-third of that money has gone into 50 Biscayne, a stylish Miami building that Related developed with a different partner. The plan is to rent the units until they can be sold.

Mr. Pérez has plenty more condos to market. Within blocks of each other on Miami's prestigious Brickell Avenue, Related this year has opened two projects totaling some 1,600 condos. Its landmark three-tower, 1,800-unit complex, Icon Brickell, is soon to start taking residents. Mr. Pérez has other large projects in the works outside of Miami, and the rate at which buyers are walking away from deposits is higher than expected. "I may end up having to hold 1,000 units," he says.

Mr. Pérez's gambit is both to protect his investments and position himself for an eventual resurgence in Miami's property market. There are risks because it isn't clear how long it will take Miami prices, down some 30% from their peak, to bottom out and recover. And, it is potentially rife with conflicts of interest in deals where Mr. Pérez sits on both sides of the negotiating table.

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Real-estate developer Jorgé Perez on his penchant for buying in Miami, its skyline shown below. 'I don't think there is any better investment than the properties I know best.'

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Mr. Pérez shrugs off any suggestion of a conflict, saying his roles are fully disclosed. And he says a big reason why he is buying his own condos is that he likes them. "I don't think there is any better investment than the properties I know best," he says.

Dean Adler, chief executive of Lubert-Adler, also doesn't see a conflict, but notes that the purchase of Related condos was the exception, not the rule. "That is not the intention of the partnership," he says. "Every deal that we're looking at now is unrelated to Related."

When closely held Related and Lubert-Adler unveiled in February a fund to buy $1 billion of distressed property, they said that the venture was "created to purchase mortgages and property solely from other developers, lenders and property owners." By last spring, Mr. Pérez was hedging, saying that the fund's primary goal wasn't to buy Related-developed condos, though he didn't rule it out.

Real-estate experts and rival developers are watching to see if Mr. Pérez will be savvy enough to emerge whole from a challenging predicament. "Miami is so flooded with product that even at 50 cents on the dollar, most of it doesn't work as rental," says Lewis Goodkin, a Miami consultant who represents investors and developers. "If anybody can do it, Jorge can."

Born in Argentina to Cuban parents, Mr. Pérez studied urban planning in the U.S. and is widely credited with helping to invigorate Miami neighborhoods by developing multifamily housing for low-income families. In 1979, he and Stephen Ross, chairman and chief executive of New York's Related Cos., co-founded Related Group of Florida, when both developers focused on low-income housing. The two men have shifted to high-end projects and separated their companies. Mr. Ross still owns about 20% of the Florida firm, Mr. Pérez says, and Mr. Pérez holds stakes in various projects led by Mr. Ross.

While he has ventured nationally, not always with success, Mr. Pérez dominates his home turf of Miami where he pioneered downtown condos and built a strong sales force with a deep and loyal customer base in Latin America and Europe. Even as he acknowledges contributing to overbuilding, Mr. Pérez exudes confidence and he sees his properties as key to making Miami a world-class city.

So, he's doubling down with the help of outside investors. The first purchases by the Related-Lubert-Adler fund were at 50 Biscayne, a 54-story, 528-unit downtown Miami condo tower that Related co-developed with Cousins Properties Inc. A company called 50 Biscayne Suites LLC bought 20 units there for $6.1 million in May, and months later, Mr. Pérez confirmed that Related and Lubert-Adler were the buyers under the Biscayne Suites name. In August, Cousins announced that it and Related had sold the final 120 residential condos in the building to the Related-Lubert-Adler fund for $30.3 million.

A Miami-area consulting company , says the fund picked up the 144 units at a combined rate of $246 a square foot, well below previous sales prices. A broker who runs a Web site that analyzes the Miami condo market, calls the deal a "bargain for Jorge." That is, Mr. Pérez as the buyer.

Matt Gove, senior vice president at Cousins, declined to discuss pricing beyond saying that the Atlanta real-estate investment trust has earned a pretax profit, before minority interest, of about $18 million on the project.

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A condominium building built by Jorge Pérez in Miami.

"Cousins felt like the partnership received a fair price," Mr. Gove says. "Especially given the market, we think 50 Biscayne was a success." Mr. Adler says the price was fair.

Other Related-Lubert-Adler fund deals include a $30 million purchase of 239 condos in Broward County and most of the condos in a 117-unit Fort Lauderdale building that is in bankruptcy-court proceedings. Mr. Pérez says he is close to sealing five more purchases, including condos in a Brickell Avenue building. "Not one of mine," he says. The fund has financed each deal with about 65% debt.

"Every project we're buying is at a discount to replacement cost," Mr. Pérez says. The discount for 50 Biscayne was lower than the others, he notes. "It's my product. It's also the best product there is."

He maintains that his purchases don't have to be limited to the Lubert-Adler partnership. He believes Related is nimble enough to avoid the busts that ruined pioneering developers in Miami Beach and Coral Gables. This year, he expects Related to turn a $200 million profit on $2 billion in sales. Next year won't be as good, he says.

But it will feature the debut of his massive legacy project, Icon Brickell, which features Philippe Starck design flourishes, a two-acre terrace and a 300-foot-long pool. He says his team is "working like crazy, calling every buyer" to close sales.

Mr. Pérez, meanwhile, will stay in the hunt for bargain buys. "There is no question in my mind that within some time -- I don't know if that's two, three or four years -- people are going to look back and say: 'These units were bought for how little!'" he says emphatically. "Some of these are really a gimme. And we think the future of Miami is very strong."

Write to Jonathan Karp at jonathan.karp@wsj.com