South Florida CEO: Money, moxie & muscle … combine: Sunny Isles Beach developers Michael a

Forget what you think you know about Donald Trump. The man really works for a living, and he is smart enough to know when the ubiquitous Trump brand needs local help to realize a profit. Take his partnership with Sunny Isles Beach developers Michael and Gil Dezer, who have amassed the largest land holdings in that seaside South Florida burg. Together with Related Group of Florida's Jorge Perez, the developers are leveraging their strengths, assets and brand-name recognition to work on a series of high-rise condominium towers along the Atlantic Ocean in Sunny Isles. Each of the 45-story Trump Towers will have 271 units ranging in price from $650,000 to $4 million. The towers are set for completion in 2007.

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This is the second South Florida partnership between Trump and the Dezers, and the first to bring Perez in as a partner. As with many Trump projects outside of New York, the celebrity developer lent his name to the project, and his company advises on its construction and marketing. Although published accounts and sources familiar with these deals say that Trump puts in little money in comparison with his partners, the financial arrangements are a closely guarded secret. Trump, however, is quick to say this is a "partnership" and "not a franchise" of his name. Perez brings to bear the full might of the Related Group--the $2.1 billion company that Builder Magazine lists as the nation's No. 1 multi-family developer. With the high volume of units Related builds every year comes an ability to mobilize an army of contractors and suppliers. And, of course, the company is also cash rich. One thing the Dezers bring to the table is obvious: the land. But the father-and-son team are also tenacious marketers and have a reputation for rending every dime of profit they can from a project, whether it is a co-op conversion in New York's Chelsea or hotel-resorts on the beach.

The four men are not without substantial egos, by any account, and it's unlikely they would have reached their stations in life without them. When I was first approached to consider an article on the Dezers, Perez and Trump, I wasn't sure there was much more to tell that hadn't already played out in other publications: Trump has invaded nearly every corner of popular culture, Jorge "cool $2 billion" Perez (a nickname picked up from his appearance on the June cover of Hispanic Business magazine) is a national coverboy for South Florida's condo craze, and the Dezers seemed happy ruling a small, albeit substantial, kingdom in still-sleepy Sunny Isles. So I set conditions for the interview to take place. It had to be all of them, in person, in the same room, at the same time, in Trump's Manhattan office. That the men accepted the conditions wasn't the only surprise.

If you have even a passing acquaintance with the television show "The Apprentice" you know what the lobby of Trump's Fifth Avenue office looks like. Step off the golden elevator and you feel like you're on a soundstage. But the similarity ends there. Once you're buzzed through the double-doors, you are struck by the ordinariness of the scene: People of all shapes and sizes milling about, folders in hand, working around cardboard boxes on the floor. There are no marble steps, mahogany doors, servants or fashion models within sight. The walls are covered with magazine covers featuring Trump, and his personal office is similarly modest, with blueprints on the table and a scale model of one of his buildings in the corner. Trump apparently reserves luxury for the rest of his building, as his is a "working" office.

Sitting down around Trump's desk, with formalities out of the way, it's all business. The picture that quickly emerges is one of an easy partnership of unequal footing. It is clear the Dezers had the street smarts to acquire the land they own, and they have the business acumen to see their projects get off the ground. It was they who approached Trump about a partnership, perhaps recognizing in him the polish and outward sophistication the father and son lack. Perez and Trump admire one another, and the two spent much of our interview lobbing compliments back and forth and riffing off each other's comments in a ping pong-like interview with me that left the Dezers swinging at the ball only occasionally, as they did when asked about the prospects for casino gambling coming to South Florida. While profit may keep these men in partnership with one another, it is clear that Trump would like to do more business with cash-rich Perez.

Whatever plans this developer triumvirate has for the future, South Florida is likely to continue to see the Dezers, Perez and Trump--in combination or individually--develop real estate here for sometime to come.--WP

RELATED ARTICLE: THE INTERVIEW

MICHAEL AND GIL DEZER, JORGE PEREZ AND DONALD TRUMP, IN THEIR OWN WORDS:

SFCEO: How important is branding to real estate development today?

Jorge Perez: The world, particularly over the last 10 years, has gone heavily into buying well-known, high quality brands. Branding has become very important in getting top prices. Donald has maintained a high level of quality because people still need to be reassured that when they see the Trump name they will be looking at something that is high quality--and that "other people, who are similar to me, are going to be living with me as neighbors" In real estate he has the best name there is.

Donald Trump: People like to use the Trump name because they get a tremendous [pricing] premium. In New York City we're getting 32 percent more per square foot than anyone else. These three guys [Michael and Gil Dezer and Perez] are very smart guys and they know that.

Michael Dezer: We are the largest landlords in Chelsea, New York, and Donald was the largest here in Midtown. Our story is the same. A Dezer building in Chelsea brings 20 to 25 percent more than other ... buildings. Why? We are spending much more on our buildings than the next guy.

Perez: Two years ago, we were using a New York firm to do our marketing in Florida and they had done a survey.... They said people were relating to me and to Related [Group] as a symbol of quality. They said there's only one name in Florida that they relate more to quality in real estate: Donald Trump. [laughing]

SFCEO: You all have interest or are pursuing projects in Las Vegas, what parallels do you see between the Las Vegas market and South Florida?

Trump: The biggest parallel, of course, is that they are both very hot markets and I can include New York in that, too.

Perez: The markets are also similar, and very attractive, because they're almost totally driven by external demand. While Miami, for example, has New York as a base in the east, Las Vegas has California; while Miami has Latin America, Las Vegas has Asia.

SFCEO: Why is external demand, from outside the area, any better than internal demand?

Trump: It's just a bigger market.

Perez: In places where we're in--Las Vegas, New York, Miami; Vancouver is another good example--it's impossible to measure [demand] that is totally international. How many people from France and Germany and South America want to buy in a Trump building? When you're [developing] in Kansas City the demand parameters are very-easy to measure.

SFCEO: Is speed to market as important or more important than it was three or four years ago?

Perez: The worst thing you can do in this market is to get stuck with a project in the middle by pricing it too high, that you open up and the market doesn't respond to it. Once it doesn't go, it's really difficult to revive. The guys that always end up losing are the ones that get caught in a market shift.

Gil Dezer: Jorge is in a position where he has 17 million projects going and he needs to know when he's done with one so he can go on to the next. We are more "mom and pop." We try to get every last dollar we can out of a project by yield management: If we see that it's selling too fast, we raise the prices. We started selling a building three years ago where we were happy to get $300 a foot but now we'll average $475, beating the pro forma by almost 20 percent.

Perez: We're looking to maximize over a very long period of time. We leave money on the table, no question, and our buyers know that. We do that for a purpose: It's important that Related's products are seen not only as the very best for price but that we're providing value. Today we use our capacity to buy [materials and labor] much more cost-effectively than anyone on the market. There are sub-contractors who do 100 percent of their work with us and whose construction prices are 20 percent lower than others. We believe strongly that some of that has to be given back to the customer so we have that repeat customer.

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SFCEO: [To Trump and the Dezers] I've never heard any of you saying that you've left money on the table. What's your philosophy of bringing value to the buyer or to the end user?

Trump: I think what Jorge is doing is right for Jorge. I tend to, in New York, set high prices and no matter what the price is, it always turns out to be low. Now, we've been riding this crazy market, so maybe we'll all turn out to be geniuses and in two years or five years you'll interview us and we'll have a whole different philosophy.

Gil Dezer: From our side, the Trump Grande project was our first with Donald and we tried to charge more because we put more into the units than you can get at most other projects.... Even Jorge can tell you it costs us more to build than it does him. All the little extras we can put into there, we will.

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Trump: It's just two very different philosophies, and they're both right. Sometimes you'll have a site that's so good, so pure, like I have on 59th and Park [Ave. in New York], the Delmonico Hotel site, that you'll price it nice and easy. I've sold out the building.

Michael Dezer: I remember when you [Trump] first bought it and you said you would get $1,000 a foot for it and you were so happy. Now you sold it at $4,000 a foot.

Trump: We never sold at $1,000 a foot because the market started going up, up, up. It's a diamond.

Perez: I have just two philosophies: You never go broke from making a profit, and pigs always end up getting slaughtered. I have been in the business now for 27 years, and I don't know how many people have gone broke in real estate always looking for that last profit.

Trump: So, Jorge, when do you see the market switching?

Perez: I think [Alan] Greenspan is a genius in the way he's managed interest rates, and I think he's going to go small steps up until he sees downward movement [in the economy] and then he'll hold rates. I think our biggest enemy is the press.

Trump: [laughter] Every week you read a story in the New York Times about the bubble.

Perez: Look, there's been a huge paradigm change in real estate where people no longer see condominiums as a home, or a second home, but almost ... like a commodity. People see the shifts in stock prices like Kmart or General Motors, that no one thought would ever have problems, and suddenly they're on the verge of going broke. The investment in real estate is seen as a protection against those types of fluctuations. It's like Donald said: If you buy an apartment on Park and 58th I can pretty much tell you that over a 10-year period that isn't going to go down in value.

SFCEO: But real estate isn't as liquid an investment as stocks and often times you're borrowing large sums to acquire it. Aren't you afraid of an economic slowdown, or of rising personal debt?

Perez: I tell developers the same that I tell buyers: If you can't hold, then don't buy. Because I can't tell you when you can turn that money you gave me for a property into a profit. But I can tell you this: that if it's a great property and you have the ability to hold, then you'll do well.

Trump: At some point, some [downturn] will happen. The question is, is it next year or next month? Ten years ago, I had a lot of smart friends who didn't invest in real estate and it was the worst thing they ever did.

SFCEO: Where do you stand on bringing casino gambling to South Florida? Do you think it will be legalized?

Trump: We're all set up in the lobby of Mar-a-Lago. [laughs]

Gil Dezer: Not having casino gambling is the one thing that is holding Miami back from being a truly world-class city. If it happens, there then there will be no reason whatsoever why people should go to Las Vegas unless you live in California or out West.

Trump: Will it happen there?

Gil Dezer: I think Miami is going to get a big kick in the butt when Cuba opens back up.

Perez: Again, I'm contradictory. I think that gambling would totally be wrong. It's like saying New York needs gambling. We don't want Miami to be Las Vegas, to be a resort, we want Miami to be a great metropolis. I think we might have some type of modified gambling, of which I'm not in favor. Gambling would be detrimental to growth, but this is all very personal.... I, along with Armando Codina and others, have been among those responsible for campaigning against gambling in South Florida.

Michael Dezer: Unlike Jorge, I'm saving up a nice piece of land on the ocean that if gambling were ever to come to South Florida I'll put a 2,000-room casino and hotel.