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The $500 Million Flip

Rodrigo Nino's Plan to Buy Condos and Quickly Resell Them Overseas

By Kevin Brass

Editor

Prodigy International c.e.o. Rodrigo Nino’s new fund hopes to spend $500 million in the next 12 to 18 months buying distressed condominiums in New York and Miami. His plan--which could be described as either audacious, unrealistic or crazy, depending on the perspective--is to quickly resell the condos, using Prodigy’s network of agents to market the units outside the United States, primarily in Europe and Central America.

This is the first time Mr. Nino has set up this type of distressed property fund. In an interview, Mr. Nino explains why he thinks the time is right to move, even though many skeptical buyers remain on the sidelines.

What’s the fund’s strategy?

What we do now is we buy wholesale and sell retail at the marked up price in periods that are no longer than 90 days. So we basically turn around the capital four times a year and therefore we have substantial returns. And that happens because we have a very strong distribution network around the world, which is Prodigy Network. That means we can literally sell thousands of individual units very quickly.

Why New York and Miami and not say Panama or the Caribbean, where you also do business?

I think now demand is concentrating for New York and Miami because the opportunity is huge. Historically speaking the prices have never been where they are today. And as we hit bottom in terms of those prices and the recession starts to recover, as it clearly is right now, people see that a true buyers’ market is already beginning. I see a lot of Miami activity already and I see a lot of activity in New York.

Rodrigo Nino

You think you can get a bounce in 90 days?

Yes, because the individual investors are already trying to buy massively. Since I have the relationships with developers, banks and individual owners, I buy in whole and mark the price slightly up and I sell retail. I buy in Miami and I sell in Milan. I buy in New York and I sell in Madrid. So that’s why I manage to create an upside on the sell. And everybody is still buying at incredible prices because obviously I move in really fast and it’s a quick cash deal transaction, buy the units in a whole, and the individual unit buyer is still getting a great deal.

What kind of prices are you paying?

From the peak of the market until now you can see discounts from 25 percent to 65 percent.

There are still going to be a lot of condominiums on the market in 90 days.

But it doesn’t matter because the individuals don’t have access to the inventory that we do. These cities have a global demand. That’s why I like Miami and New York. Because you have interest from all over the world. And how is a guy in Milan going to buy this here in Miami or Manhattan? That’s the unit we present to them and they pay the premium, if you wish, for getting the unit already prepared and ready for them to acquire. The key is, as you say, there are a lot of units. But not all of the inventory makes sense.

The good inventory is flying off the shelves. The good inventory in Miami, for example, they way things are now, particularly in Brickell and on the beach, won’t last beyond the first of 2010.

It’s very difficult to buy today. I know that is very surprising, but it is. It’s funny, because we’re in that inflection point where you would think the buyer is in control, but we’re really not. Because if you try to buy and you don’t come up with a reasonable price you will be missing the market all together.

Aren’t your buyers having the same problem?

Yes, that’s why I can charge a premium. Because I’ve logged that inventory for them and they’re willing to pay a slightly higher price than the one I’m getting.

Are you seeing many opportunities to buy in bulk?

Sure, I just closed 10 units, in a smaller bulk deal, of $2 million, 10 units on Brickell Ave. And I have to say that probably before the first 30 days the units will be gone. I think I already have three or four of the units of the 10 we purchased under contract.

And those are typically sold to European buyers?

Yes, I’m selling to European buyers right now. And Mexicans as well. And not everybody in Europe. I’m selling to Spaniards and Italians. It seems there is already a buying trend kicking in and not everybody has access to the inventory. That’s where we come into play.

Why does this model work now?

All of [the vulture buyers] missed the market completely. They were low balling so much they are out of the game. With the fracture of the market that we went through, a number of opportunities were posed. But there was a disconnect between the institutional buyers and the sellers because the sellers ended up being the banks that couldn’t get the inventory off their balance sheets and take another hit.

With some activity starting to pick up, in terms of the economy, the banks are in better shape and now they are releasing the assets in a better way. That’s why prices are making sense. That’s why transactions are happening.

You don’t want to get into the rental game?

No, I don’t want to hold on to the inventory. But that’s only because of my particular situation. What I do have is the individual buyers. So what would the point be to sit on the inventory and tie up my money for that long?

Basically I buy, I bridge the transaction, and turnaround and sell the individual unit for people interested in buying and holding.

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