BEKO Equities’ $180 million buyout of a bayfront West Palm Beach condo is a go. But another bulk unit bid of $323.4 million for a bigger building nearby is jammed up by 32 holdouts, the firm says.
The investor is flexible on terms, such as leasebacks, but not on price: the offer is final, BEKO’s O.D. Kobo told The Real Deal.
Yet, some of the holdout owners have asked for millions above the current offer, a request he called “nuts,” saying he will walk away if there’s no deal.
BEKO Equities, an Aventura-based joint venture between Kobo, a South Florida real estate newcomer, and longtime player Gilbert Benhamou’s Immocorp, has been working on securing its slice of the booming West Palm waterfront market for about a year, targeting the Flagler Yacht Club and Portofino South condo buildings for bulk unit buyouts.
It has steadily increased the ante, with its latest offer for both buildings hitting roughly $503.4 million. This surpasses the highest known South Florida bulk buyout offer, Terra’s $500 million bid for the Castle Beach Club in Miami Beach, which didn’t go through.
Now, BEKO has put all 39 units at Flagler Yacht Club under contract for a combined $180 million, Kobo said. The complex, consisting of a four-story and a two-story building built in 1981, is at 3701 South Flagler Drive.
Todd Cury, president of the Flagler Yacht Club board, confirmed the total price, though he couldn’t independently confirm all units are under contract, because the association wasn’t involved.
Instead, BEKO hammered out purchase-and-sale agreements with individual unit owners, Kobo said.
At $180 million, the purchase averages to $4.6 million per unit, though individual unit prices may differ based on the prorated amount decided by the associations. Closings are expected to begin in the coming weeks, Kobo said.
The Portofino South has proved a tougher deal, with BEKO consistently upping the offer this year, most recently to $323.4 million, getting 108 unit owners on board, leaving 32 holdouts, Kobo said.
Kobo is willing to keep the $323.4 million tender pending for longer and meet with the nearly quarter of unit owners still not on board, including to tweak any sale agreement clauses like the leaseback terms. But, he told The Real Deal, some of the Portofino South holdouts have asked for $2 million more for their units, a price Kobo said he isn’t willing to pay. Also, the pending agreements for the 108 units owners willing to sell have clauses saying others won’t get better deals, he said.
“It’s completely nuts,” he said, pointing out that West Palm has a moratorium until January on new waterfront project applications. “I don’t know any developer who would take on this risk. I am giving them one last shot.”
BEKO hasn’t yet settled on a project, though he says the location calls for something with “taste” and a “generational project,” as opposed to “let’s get a brand and slap it on.”
The Portofino and Flagler Yacht Club are separated by a 1.4-acre lot where Kolter Group and Perko Development Partners plan the 39-unit luxury Maison d’Or condo project. Nearby, Nadim Ashi’s Fort Partners plans a 61-unit condo complex with two buildings.
The $323.4 million offer marks the fourth increase, with BEKO most recently offering $295 million with a deadline of Nov. 3 for Portofino South. It started at about $202 million for the building in January.
Completed in 1971, the 12-story, T-shaped Portofino South has 140 units. The building, at 3800 Washington Road, has been saddled with high costs, including a $12 million special assessment for infrastructure improvements such as fire sprinklers.
Greg D’Elia, the Portofino South board president, didn’t confirm inquiries about BEKO’s latest $323.4 million offer. He said the investment firm hasn’t told him anything and that he has no new information.
Thomas Villani, the board’s vice president, said he was offered about $1.8 million for his unit but declined to say whether he had signed an agreement.
Sentiment among owners is split on whether to take the buyout, he added, noting that it’s not so much about money for many unit owners. Portofino South is a second or third home of many owners.
Under Florida law, redevelopment of aging condo buildings necessitates a condo termination that requires approval from 80 percent of all unit owners. Because this can be challenged by 5 percent of unit owners, developers often aim to purchase over 95 percent of units.
Condo governing documents also spell out the voting thresholds for terminations.
Flagler Yacht Club’s declaration only requires two-thirds owner approval. Over the course of four months, BEKO and association attorneys exchanged purchase-and-sale agreements, with 32 unit owners agreeing to sell. This surpassed the declaration’s requirement but still left BEKO exposed to pushback from the remaining 7 unit owners, who represented nearly 18 percent of the vote.
Kobo cited the Biscayne 21 saga, in which Two Roads Development’s buyout of the Miami condo got bogged down in a yearslong court battle with the holdouts, as a reason he worked to get all Flagler Yacht Club unit owners on board.
That’s when Kobo opted to meet with unit owners, finding that holdouts’ concerns ranged from leaseback terms to their desire to keep fixtures like chandeliers. Their individual contracts spell out these terms.
Cury, the board president, confirmed Kobo has met and “diligently worked” with the unit owners, including at a couple of town halls.
The Portofino South deal is partly complicated by the declaration that requires 100 percent unit owner approval for a termination. So far, BEKO has secured sale agreements for 77 percent of units.
Tensions have been rising among residents over the buyout. Real estate agent Greg Greer of Charles Rutenberg Realty Fort Lauderdale, who is working on the deal, reportedly sent a text message to a holdout owner calling her a “self-centered narcissist, a nutcase and a psychotic witch,” The Palm Beach Post reported in September.
But Greer told the publication that the owner previously had sent him an AI image showing a decapitated head on a platter featuring BEKO.
Kobo told TRD the image showed his decapitated head and was sent to a group chat.
“I am not accustomed to that,” he said.
Kobo, born in Hong Kong as Oded David Kobo, started out investing in tech and digital infrastructure and then became an asset manager investing in tech, digital infrastructure, energy and some real estate on behalf of sovereign wealth funds and institutional investors, primarily focused on Asia and Africa.
In the aughts, Kobo partnered with Sheikh Hamad bin Jassim bin Jaber Al Thani (HBJ), the former prime minister of Qatar and chairman of the Qatar Investment Authority, including investing HBJ’s capital in Chinese internet and digital infrastructure companies.
Kobo’s real estate investments have been few, with one of his marquee assets being London’s Camden Market. Kobo was part of a partnership that sold the retail hub to Teddy Sagi.
Kobo moved to South Florida with his family about two years ago.
“I became the cliché,” he said. “I am another Jewish guy doing real estate in South Florida.”
As of Tuesday, he was still working with Portofino South, saying two more unit owners agreed, bringing BEKO to the 108.
“I didn’t come from Africa or from China to kick out, God forbid, an older person,” he said, though he added that he is willing to part with his purchase bid if he doesn’t get all unit owners to a contract. “With all due respect, if they don’t want it, I will walk.”
