When BB&T Corp. bought BankAtlantic in 2012, BB&T had no interest in roughly $500 million in “scratch and dent” assets owned by the Fort Lauderdale-based lender.
“BB&T didn’t want them, but we looked at them through a different lens and realized these are fabulous assets that could be turned into a significant profit opportunity,” said Seth Wise, an official with BankAtlantic’s holding company.
So after the sale, Wise and other BankAtlantic executives formed BBX Capital Real Estate to manage the portfolio of land and loans. With seven projects in the pipeline across South Florida, including four in Broward and Palm Beach counties, BBX will be a key player in the development landscape of 2015.
Last spring, BBX entered a joint venture with Delray Beach-based New Urban Communities to build Village at Victoria Park, 30 townhomes in a gated community north of Northeast 9th Street between Victoria Park Road and Northeast 17th Way in Fort Lauderdale. The 2-acre site once housed the original BankAtlantic headquarters.
Tim Hernandez, head of New Urban, said he was eager to work with BBX because BankAtlantic was his firm’s lender on developments in Miramar and Jupiter.
“When times got tough, they were patient with us and worked with us and extended our loans, and at the end of the day, they got paid off,” Hernandez said. “All the credit to them for standing by us.”
BBX also has partnered with Boca Raton-based Procacci Development Corp. on a site near the Galleria Mall. An 84,000-square-foot office building and a convenience store and gas station sit on the property now, but BBX and Procacci hope to get approvals for a mixed-use project that would include offices and residential units.
In Palm Beach County, BBX is planning apartments and condos on more than 7 acres along the Intracoastal Waterway in the historic Northwood section of West Palm Beach.
It also controls 30 acres along PGA Boulevard in Palm Beach Gardens. The company is working with Fort Lauderdale-based Stiles to convert a closed Robb & Stucky furniture store into offices. BBX also hopes to strike joint ventures with other developers and build offices, 300 apartments, a 125-room hotel and a restaurant on the property.
“A big part of our strategy is partnering with long-established developers who we had a prior relationship with or we were their lender at some point,” Wise said. “We’ve virtually eliminated the partner risk because of who we’re dealing with.”
In December, a federal jury ruled that BBX’s parent, BBX Capital Corp., and chairman Alan Levan misled investors about loan losses during the 2007 housing collapse.
Levan and BBX Capital, then operating as BankAtlantic Bancorp, deny any wrongdoing, saying Levan told investors what he thought was accurate at the time. The company is appealing.
Ken Thomas, a South Florida economist and banking analyst, said he doesn’t expect the litigation to hamper BBX Real Estate’s development plans.
“That would have been a much bigger issue if we still had BankAtlantic,” Thomas said. “This doesn’t impact them as much because they’re not truly a retail business dealing with consumers.
“They’re working with people who want to make deals and as long as [BBX Real Estate] has the ability to generate liquidity … that’s what will carry the day.”