In a historic bet on Palm Beach County, billionaire Jeff Greene has spent nearly a quarter-billion dollars in less than five years to amass real estate from Lantana to Jupiter.
Greene has assembled dozens of desirable properties, putting him in position to reshape West Palm Beach’s downtown and its north-end waterfront. His wide-ranging shopping list includes 300 unsold units in two boomtime condo towers downtown, but it extends beyond West Palm Beach to include the luxe Omphoy Ocean Resort in Palm Beach, a motel in Jupiter and industrial land along Florida’s Turnpike.
Since late 2009, Greene has spent $236.7 million in Palm Beach County, property records and Palm Beach Post research show. He also paid $11.8 million for condos in Jensen Beach and $2.1 million for condos in Pompano Beach, bringing the total price tag to $250.6 million.
The shopping spree invites comparisons to legendary land barons Henry Flagler, John MacArthur and Arthur Vining Davis. But Greene differs from them in an important respect: While they bought huge swaths of raw land and built communities, Greene is moving into already-developed areas.
But like his deep-pocketed predecessors, Greene has made himself the biggest player in the local real estate market. His aggressive approach means he’s the go-to buyer for brokers pitching properties and for city officials hoping for splashy additions to the skyline. Greene’s buying binge comes at the tail end of the bust, a moment when one bullish buyer can prod the long-awaited recovery forward.
A billionaire without an entourage, Greene answers his own phone, drives his own car (a Porsche Cayenne) and regularly visits properties in his portfolio. His bureaucracy consists of a staff of four employees who work from the historic former Post Office building in Palm Beach. Greene bought the building for $3.7 million in 2011.
In an interview with The Post, Greene, whose resume includes a failed run for U.S. Senate in 2010, acknowledged that such a big and varied bet on one market is unconventional.
“I’m sure when Henry Flagler was doing what he was doing, some people thought he was a kook,” Greene said. “And I’m sure some people think I’m a kook.”
Worth $2.5 billion
The amounts are staggering enough that a few observers are whispering that Greene might be creating his own mini-bubble. Greene now controls property with a taxable value of $186 million, generating an annual property tax bill north of $3 million.
In just one six-month span in 2012, he spent $82 million. Greene’s favorite place to buy is West Palm Beach, where he has dropped $125 million. His new hometown of Palm Beach, where Greene has spent $83 million, is the No. 2 target.
After a flood of purchases over the past three years, Greene was tight-lipped about future land buys but hinted he’s not done. Curiously, Greene said he couldn’t verify how much he has invested.
“I don’t even know the exact amount,” Greene said. “I don’t keep track of it.”
Greene, 59, was born in Massachusetts and moved to West Palm Beach when he was in high school. After attending Harvard Business School, Greene made his money as an apartment landlord in Southern California.
His biggest win came when he bet that the subprime mortgage bubble would burst. In 2006, Greene bought credit default swaps that he later cashed in for a profit of $500 million to $800 million. Suddenly wealthy enough to show up on Forbes magazine’s list of billionaires — he’s number 725 at $2.5 billion — Greene grew weary of Los Angeles’ hectic pace.
“The traffic, the aggravation, the crime,” Greene said.
Greene’s first purchase in Palm Beach County came in December 2009, when he paid $24 million for an oceanfront manse in Palm Beach. Before embarking on his buying spree, he tried his hand at politics.
Greene spent $24 million on a four-month campaign for the Democratic U.S. Senate nomination but lost in a landslide to Kendrick Meek, who finished third in the general election, behind Republican Marco Rubio and independent Charlie Crist.
The campaign proved bruising. Meek bashed Greene for fattening his fortune by betting against subprime mortgages. After the primary, Greene filed a libel suit against the Tampa Bay Times and The Miami Herald, saying the papers defamed him with articles describing his role in a California condo complex and wild parties on his 145-foot yacht. A judge dismissed the suit, but an appeals court recently ruled that the dismissal was premature and that the case should resume.
During the campaign, a New York tabloid referred to Greene as a “playboy.” These days, he’s a dedicated father of three who often drives his kids to school. In February, he and his wife, Mei Sze, shared the spotlight with former President George W. Bush at the annual dinner of the Anti-Defamation League at The Breakers.
‘A broker’s dream’
After his brief foray into politics, Greene returned to his comfort zone — real estate. In 2011, Greene started snapping up property in a county still in the throes of a devastating real estate bust. In a market where buyers were scarce and lenders scared, Greene emerged as a seller’s best friend. He had two crucial traits: He saw value in Palm Beach County, and he paid cash.
“Every broker in the county is pitching deals to this guy,” said Paul Snitkin, a West Palm Beach real estate broker who has worked with Greene on a number of transactions. “He’s like a broker’s dream.”
After he moved to Palm Beach, Greene began selling properties in California and buying them here.
“A lot of this is just motivated by restructuring the whole portfolio I acquired since 1972,” Greene said. “I lived in California for 28 years and built up a big portfolio of real estate. It’s hard to manage properties from far away.”
An aversion to travel is only part of the reason behind Greene’s buying spree. It’s also driven by taxes. If he were to cash out of his California apartment complexes, he would owe capital gains taxes as high as 25 percent. By spending the proceeds on other investment property through so-called 1031 exchanges, Greene can delay the tax bill.
“It’s tax-deferred money, so 25 percent of his money isn’t really his money,” said Neil Merin, a real estate broker and chairman of NAI/Merin Hunter Codman in West Palm Beach. “He’s using the government’s money for free.”
Also playing into Greene’s strategy is his distaste for running a far-flung portfolio. After building an empire in earthquake country, he seems unconcerned about placing a big pile of chips on Hurricane Alley.
“I have always had a strong geographic focus,” Greene said. “I’m going to pick one neighborhood, one market, really know it and really believe in it. It gives me a big strategic advantage. All the brokers know me, and at some point I’ll be as knowledgeable as anybody about this market.”
But Greene said his main motive is that he’s fired up by the potential in what he considers an overlooked area.
“I just think it’s really cool here,” he said. “The city’s on the move. You don’t have to be a visionary to see what’s going on in this market. It’s right before our eyes.”
Greene points to a variety of factors — wealthy business owners in Palm Beach, the new Palm Beach Outlets mall, plans to finally build a convention center hotel and the proposed All Aboard Florida train.
“I don’t think it’s going to suddenly pop,” Greene said. “It’s a jigsaw puzzle and different pieces of the puzzle keep popping into place.”
No partners, no lenders
Unlike the investors who spent an estimated $50 million to assemble 77 acres in downtown West Palm Beach in the late 1980s, land that would become CityPlace, Greene’s buys have been small and scattered.
His deals have been as small as $532,000 for a 4,000-square-foot house in West Palm Beach and as large as the purchase of a $66 million note for a reported $42 million to take control of the luxury Omphoy Ocean Resort in Palm Beach.
Greene strikes local real estate players as both a boon to Palm Beach County sellers and something of an idiosyncratic investor. He possesses the deep pockets of a large institutional investor but none of the constraints about buying certain types of property. Geographic diversification doesn’t concern him, and he doesn’t mind negotiating for six-figure deals that would be too small for most large investors.
“He doesn’t have any partners,” Merin said. “He doesn’t have any lenders.”
If Greene wanted to simplify his life, he could have rolled his taxable gains into one or two trophy properties and collected rent checks. Instead, he has negotiated dozens of small deals and has taken on the role of developer, pushing properties through zoning approval and hiring architects.
Merin represented the American Red Cross in the $3.4 million sale of sites in downtown West Palm Beach to Greene, and the broker noted the speed of Greene’s decisions.
“He moves quickly and decisively,” Merin said. “When he sees something he wants, and you make a price with him, it’s done.”
That property borders an area next to a major Tri-Rail station long planned for development. It also has been pitched as a spring-training baseball stadium with practice fields elsewhere.
When Greene meets West Palm Beach planning officials, the investor refers to notes scribbled on a small pad as he asks about the zoning of various properties that have caught his eye.
Betting on the favorite to show
Greene started buying at bargain prices but lately has been paying a premium.
Last year Greene paid $950,000 for 321 Datura St. in West Palm Beach, a parcel that sold in 2012 for $650,000. And last month Greene dropped $15 million on the parking lot at 550 N. Quadrille in West Palm Beach, a site that last sold for $3.2 million in 2005. However, since the last sale, the property has been approved for more dense development, boosting its value.
“Jeff Greene has a much bigger vision for what West Palm Beach will be someday,” said Harvey Oyer, a land use attorney who works for Greene. “Properties that you and I have looked at for years and assigned a different value to, he looks at from a different perspective.”
Greene said that even when he pays a premium, he still considers the purchase a “low-risk bet.”
“Every investment is a bet,” Greene said. “The question is, are you buying the favorite to show, or the long-shot to win? I’m buying the favorite to show.”
The scope of Greene’s shopping spree raises questions about his plans for Palm Beach County. For some of his investments, Greene simply acts as a landlord.
In other cases, he’s a developer. Greene is building an apartment complex near Palm Beach Lakes Boulevard, and he proposed a 200-unit condo on property he owns at Clematis and Datura streets.
Greene said he’s most excited about developing an office tower at 550 N. Quadrille, just north of the Palm Beach County courthouse. He aims to build as much as 830,000 square feet, a huge size if it’s all devoted to offices, with high-end restaurants and a gym.
Greene sees that project as his chance to make a mark on West Palm Beach’s skyline. Standing on the Palm Beach side of the Intracoastal Waterway in late March, he looked across the water at the buildings along Flagler Drive.
“There’s not a lot of architectural excitement,” Greene said.
To combat that, he said he hopes to hire a prominent architect from New York to design the tower at 550 N. Quadrille.
“If I do something really cool and it sets the standard, the next guy is going to try to raise the bar,” Greene said. “He won’t be able to build another rectangular box.”
Whether West Palm Beach can absorb hundreds of thousands of square feet of office space is another matter. The city’s vacancy rate was 21 percent at the end of 2013, according to brokerage firm CBRE.
Greene is proposing a non-waterfront building that would be nearly as large as downtown’s three high-end office addresses — CityPlace Tower, Esperante Corporate Center and Phillips Point — combined. Those three have a total of 990,000 square feet, about 13 percent of it vacant, according to CoStar, a commercial real estate research firm.
But Greene called the vacancy rate “deceiving.” More companies would move to West Palm Beach if the city offered bigger chunks of high-end office space, he said. He pointed to the recent decision by Cancer Treatment Centers of America to move its headquarters from Illinois to Boca Raton. The company looked at space in West Palm Beach but couldn’t find large blocks of available offices.
“The conventional wisdom is that the demand isn’t there,” he said. “I think the supply isn’t there.”
Can afford to fail
The Quadrille site isn’t the only place where Greene could make his mark. He paid $7.65 million for a vacant lot along the Intracoastal at 5750 N. Flagler Drive and $2.65 million for vacant land at 2323 N. Flagler. The second site sits near Currie Park and the city’s Northwood Village amid large properties left vacant by the land bust.
As Greene turns his focus to development, those who work with him say he’s keen to build his reputation.
“He wants to leave behind some legacy projects,” Oyer said. “You have a very well-financed person whose goal is to build a better a community, and not just to extract money from the community. Viewed that way, this is exactly the kind of guy we want investing in our downtown.”
Despite wagering nearly a quarter-billion dollars on Palm Beach County real estate in the past three years, Greene said he’s not particularly worried about the potential downside.
“If I’m wrong, it’s not going to ruin me,” Greene said. “I can afford to be wrong. But hopefully I’m not wrong.”
Staff writer Joel Engelhardt contributed to this story.
GREENE'S BIGGEST BUYS
1. Omphoy Ocean Resort
In 2011, Greene paid a reported $42 million for the $66 million mortgage on the Palm Beach hotel.
2. City Palms
In 2012, Greene paid $34 million for 165 units in the condo project at 480 Hibiscus St.
3. The Strand
In 2013, Greene paid $28.5 million for 166 units in the condo tower at 255 Evernia St.
4. 1200 S. Ocean Blvd.
Not an investment but a home, Greene in 2009 paid $24 million for the oceanfront manse in Palm Beach.