Grant Cardone Partners with Penn-Florida in Boca Raton Condominium Conversion

Overview of the Project

In a strategic move to revitalize the troubled 101 Via Mizner multifamily project in Boca Raton, renowned entrepreneur Grant Cardone has joined forces with Penn-Florida Companies. This partnership aims to convert the distressed 14-story property, comprised of 366 units, into condominiums.

Bankruptcy Court Hearing

On Thursday, U.S. Bankruptcy Judge Peter Russin is scheduled to deliberate on a motion submitted by the Penn-Florida subsidiary that currently owns the building, located at 101 East Camino Real. The motion seeks court approval for a property sale price of $235 million. The prospective buyer is a joint venture led by Cardone and Penn-Florida President Mark Gensheimer.

Previous Developments

The building, which finalized construction in 2017, had been under scrutiny due to financial distress. In a move to protect its interests, Penn-Florida filed for Chapter 11 reorganization earlier this year. This request aimed to delay an impending auction for the 3.1-acre development, scheduled for that Thursday, which has since been canceled following the latest court motion.

Stalking Horse Bid

Cardone’s Aventura-based Cardone Capital previously submitted a $230 million stalking horse bid for the property. Negotiations have been ongoing to amend this initial bid to better support the interests of the debtor’s estate, according to a motion filed by the ownership entity on July 3.

Financial Details

• Purchase Price: $235 million
• Penn-Florida Contribution: $15 million toward the purchase
• Cardone’s Contribution: $220 million, aimed at addressing creditor debts, including a $145 million loan from Blackstone Mortgage Trust.

“It’s crucial for us to ensure that this deal benefits all stakeholders involved,” Cardone stated in response to court proceedings.

Future Plans for 101 Via Mizner

Cardone’s vision for 101 Via Mizner includes converting the existing multifamily units into condominiums with plans to sell shares in the new ownership entity. Additionally, Cardone intends to offer up to 1,000 bitcoin (valued at approximately $109 million) once the deal closes.

“101 Via Mizner is our fifth real estate/bitcoin project this year,” Cardone commented, emphasizing his commitment with plans for 12 projects by summer’s end, focusing on attracting regular investors.

Existing Legal Challenges

The partnership isn’t without its challenges. Recently, a federal appeals court allowed a class-action lawsuit to proceed against Cardone, Cardone Capital, and two funds, initiated by the daughter of a deceased investor. The allegations contend that Cardone failed to adequately disclose financial risks and investor fees, leading to accusations of misleading followers.

Expected Returns from the Condo Conversion

The financial outlook for the condo conversion appears promising. Court documents suggest:

• Expected Sale Proceeds: Over $400 million, with equity investors seeing returns until total sales reach $300 million.
• Projected Gains: Penn-Florida and Cardone would evenly share profits beyond this threshold.

The ownership entity forecasts at least $50 million in additional gains from the conversion project.

Additional Developments

Beyond the conversion of 101 Via Mizner, Cardone is collaborating with Penn-Florida to develop a Mandarin Oriental-branded hotel adjacent to the multifamily site, further enhancing the area’s real estate potential.

Conclusion

This collaboration between Grant Cardone and Penn-Florida Companies marks a significant step in the transformation of the Boca Raton real estate landscape. With plans for condominium development and additional investments, the joint venture aims to rejuvenate the local economy while appealing to a broad base of investors.

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