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Brazilian Investor Looking To Buy-N-Flip

January 8, 2014

A Brazilian oligarch who founded and controls an airline has been quietly scooping up prime residential development sites in Miami’s urban core. The buyer hopes to buy-and-flip his way to a profit as part of the current real estate boom.

José Afonso Assumpção, the 80-year-old founder and majority owner of the Brazilian airline Líder Aviação, spent much of 2013 assembling a parcel of land in Brickell just a few blocks west of the proposed Brickell CityCentre project, then crafting his vision for a massive, 66-story mixed-use condo there. Now, on the brink of selling that parcel for “almost double” what he originally paid, Assumpção has branched out to another white-hot Miami neighborhood, Edgewater, paying top dollar for a lot in the area in anticipation of further land value appreciation.

Assumpção, who founded Líder as a one-aircraft Amazonian air service in 1958 and has since grown the company to be the largest private jet and helicopter concern in Brazil, has waded remarkably deep into the real estate game in two of Miami’s most coveted developer hot spots without attracting much attention. Part of the reason: The transactions have been funneled through a shell company, Miami Sunrise Properties, which is not registered to Assumpção but to an employee inside the local unit of his sprawling aviation empire. Elena Arechaga, who works as president of a Doral-based Aviação subsidiary, is listed as the sole officer for Miami Sunrise.

Miami-Dade County records show Arechaga has been trusted by Assumpção to act on his behalf since at least 2001, when she was given power-of-attorney privileges to pay the mortgage on her boss’ Key Biscayne pied-a-terre.

Most recently, Arechaga used Miami Sunrise to buy a 37,000 square-foot infill site in Edgewater—at the intersection of Biscayne Boulevard and 34th Street—paying a record $205 per square foot for the multi-lot assemblage.

Ryan Shaw, a senior associate at Marcus & Millichap who helped arrange that transaction, said Assumpção has no immediate interest in developing that plot, even though its sale included a permit to build a 16-story, 127-unit residential tower on site.

“It’s more of a land bank opportunity for them,” Shaw said, “These guys are just going to hold on to it, so I don’t think they’re going to be competing head-to-head with any developers.”

However, according to Rejane Gomes de Paula, an agent with Miami-based Fortune International Realty who represents Assumpção and says he is “like family” to her, the Brazilian multimillionaire is only getting started. Between January and February of 2013, Assumpção used Miami Sunrise to corner nearly the entire city block between Southwest 10th Street and Southwest 11th Street just east of the I-95 overpass, in the western part of Miami’s financial district. Miami-Dade appraiser records show Miami Sunrise paid $13 million for an assemblage of contiguous lots totaling 92,250 square feet, averaging $135 per square foot.

Miami Sunrise has since engaged in an eviction processes against various holdover residential tenants occupying single-family homes on the land. In April, Assumpção told Jornal O Tempo, his hometown newspaper, that he was planning a project tentatively named “1010 Second” at the site. According to the newspaper, the plan was for two 33-story towers containing 210 residential apartments, as well as a 200-room hotel, five-story parking garage and mixed-use retail space.

Not mentioned in any other publication since then, that project has since been scrapped, Gomes told the Daily Business Review. Another buyer has offered Assumpção “almost double” what he paid, in a transaction expected to close early in 2014.

“We are looking to other thing,” Gomes, the Fortune agent, said.

It is unclear what inspired Assumpção to jump into the real estate investment game in 2013. Northbound money from investors in Brazil, Venezuela and other Latin American countries has helped buoy the South Florida residential real estate market since at least 2009, although for the most part it has been funneled by individuals buying condo units, not to fund development opportunities.

Jonathan Gerszberg, another senior associate at Marcus & Millichamp who worked on the Edgewater deal with Assumpção’s conduit, said he’s increasingly seen foreign buyers who might have only tepidly dipped their toes into Miami’s real estate market a few years ago—perhaps just buying a second home—increasingly dive in headfirst as investors in more current opportunities.

“We’re seeing quite an upswelling of new investment dollars coming into Miami,” Gerszberg said. “A lot of them, when they start out, they buy a condo, or a second property. Then they buy an investment condo. Then they really start investing.”

Specifically talking about Assumpção, whom he would only identify as “the Brazilian investor,” Gerzsberg said, “he’s relatively new but people in his team were familiar with this area.”

Miami-Dade County records show the Brazilian businessman has been active in the Miami market since at least 1992, when he bought a 12th-floor unit inside a Key Biscayne condo tower. Back then, Assumpção took out a $238,000 mortgage on the property from defunct Republic National Bank of Miami. No financing was recorded for his more recent, multimillion dollar transactions.

Assumpção does not appear in the most recent list of Brazil’s wealthiest compiled by Forbes Magazine, which does not include anyone the magazine does not believe to be worth at least 1 billion Brazilian real—or some $446 million. But Assumpção’s fortune, much of it amassed since Brazil deregulated its airline industry in the late 1990s, is likely worth at least several hundred million dollars. In 2009, he sold a 42.5 percent stake of Líder Aviação to Houston-based Bristow Group Inc., receiving $119 million in cash. Since then he has continued to reap the rewards of being a service provider to companies capitalizing on Brazil’s current oil boom. Strong demand for helicopter taxi services to remote Brazilian oil fields means Líder Aviação is on pace to book revenues exceeding 1 billion real this year, the company has said, a jump of over 20 percent when compared to 2012.

In 1995, Assumpção found himself in the middle of a political scandal involving a $1.4 billion contract sought by the American military contractor Raytheon, whom he represented. Local and international media including the New York Times and Miami Herald reported on leaked excerpts of a secret Brazilian police wiretap tape in which a presidential aide appeared to suggest that Assumpcao pay a bribe to a politician who opposed the contract.

Neither Assumpcao nor Raytheon was charged with any wrongdoing. Raytheon denied paying any bribes and the U.S. envoy to Brazil at the time said no one alleged the company did anything unethical.

Source: DBR

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