The real estate strategy of Yoram Izhak and his team at North Miami-based I.M.C. Property Management doesn’t appear flashy, and its efforts aren’t aimed at top-tier markets. But this no-frills approach to rescuing distressed properties has proven very productive.
Izhak has been buying retail plazas in secondary markets focused on discounters and warehouses. I.M.C. has acquired about $100 million in properties in Florida this year. Overall, it owns 8 million square feet.
Its workforce has expanded by 30 percent this year, to reach 70, so it could manage all the new properties, Izhak said.
That’s not bad for someone who started out in the clothing business.
Originally from Tel Aviv, Israel, Izhak came to Miami at age 6 and attended Miami Killian Senior High School. He entered the clothing business and sold to discount retailers like Family Dollar and Wal-Mart Stores. He started investing in real estate in 1998 with mom-and-pop warehouses, and bought more real estate after he sold his clothing company.
“We thought we knew a lot then, but we didn’t know a lot,” Izhak said. “At first, we were just parking the money in real estate.”
Three big investors joined Izhak at I.M.C. and helped it buy more properties throughout Florida. One of those investors is Alan Lipton, who said he previously worked with Wal-Mart founder Sam Walton and that I.M.C.’s strategy of buying properties geared toward discount retailers appealed to him.
Carlos Segrera, I.M.C.’s director of acquisitions and finance, said it didn’t lose any properties or cause any losses to banks during the recession because it didn’t have construction projects or engage in speculation. The properties that struggled with high vacancy rates were balanced out by other properties performing well. It also helped, Izhak noted, that dollar stores have been expanding.
Following a brief due diligence period, I.M.C. usually buys with cash and secures financing later, Izhak said.
One of I.M.C.’s first big deals was the 2010 acquisition of Northside Shopping Center, a 457,749-square-foot mall in Miami’s Liberty City. It reduced the vacancy rate there to zero from 40 percent, and now it’s expanding on three outparcels, Izhak said. It brought in Dollar Tree and is building an elevator – among $1.5 million in tenant improvements – so Ross Dress for Less can move into the second floor.
The company is spending $6 million renovating the 680,000-square-foot Lauderhill Mall, and was able to attract more discount retailers by offering lower rent and tenant improvements. Izhak said he has strong ties to the discount retailers from his days with the clothing company.
Segrera said I.M.C.’s $23 million purchase of the 274,000-square-foot Lakes Mall in Lauderdale Lakes was a stabilized situation. The property was renovated by the previous owner and fully leased with good tenants, he said.
“You can’t build something like that today for that price,” Segrera said.
He said Woodlake Plaza in West Palm Beach is another stabilized property that I.M.C. has a contract to close on for $10.1 million. The 139,000-square-foot shopping center should generate a 9 or 10 percent annual return, Segrera said.
I.M.C.’s latest distressed deal is the $5.4 million purchase of Sabina Plaza at 4001 S.W. 152nd Ave. in Miami, a site targeted with a $6.8 million foreclosure lawsuit by Florida Community Bank. Izhak said he already has a lease with Dollar Tree there, and he’ll set rent at $15 a square foot – about half of what the developer was asking for.
“We don’t need to be geniuses,” Izhak said. “It’s all about pricing and locations.”
About 45 percent of I.M.C.’s properties are industrial. Segrera said it prefers multi-bay properties, so it’s not a big deal if it loses one of the many tenants.
I.M.C. Properties’ biggest acquisitions in 2012
Lauderdale Lakes Mall: $23 million
Lauderhill Mall: $18.6 million
Woodlake Plaza, West Palm Beach: $10.1 million (under contract)
Hialeah Gardens industrial buildings: $10 million
Colonial 8010 LLC, Orlando: $7.3 million
Tamiami 142 Plaza, Miami: $6.1 million