Andrew Farkas
Founder, chairman and CEO at Island Capital Group
“This is the moment when fortunes are made.”
These were the words that Andrew Farkas spoke from the stage to this reporter at Commercial Observer’s State of Commercial Real Estate forum on May 2. And it would seem that Farkas is a devout practitioner of this gospel.
About 18 or 20 months ago, Farkas put his finger up to the winds and decided that the moment was ripe to monetize the businesses he had been assembling since the Global Financial Crisis — like his yachting business — and he had, in his own words, one of his best years ever.
“Cap rates were low,” Farkas told CO back in February about the decision to liquidate. “The numbers were very, very attractive for the seller. … All I can say is that we tend to buy during times of distress, and sell when things are strong.”
After he liquidated, Farkas dove into hospitality, purchasing the 678-key Lexington Hotel from DiamondRock Hospitality for $185.6 million and the nearly 1,800-room Sheraton Times Square with MCR for $373 million.
“We had a sort of big capex program scheduled to go into the asset,” Farkas said. “We opened it and, in truth, the amount of money we had to spend on the asset was so much less than we had originally planned. We basically bought new sheets and things like that. But [today] the hotel is 95 percent occupied. And the average daily rate was around $300. So, it’s just — it’s killing it.”
In addition to the hospitality deals, Farkas has been buying up garden apartments and grocery-
anchored retail around the country.
Few people on Power 100 have been around as long as Andrew Farkas or had a greater impact on the real estate landscape. When he was still less than a decade out of school he started Insignia Financial Group, which would go on to buy Edward S. Gordon’s real estate company and control some 275,000 apartments and 200 million square feet of commercial space. He has held the deeds to some great pieces of property like, say, The Helmsley Building on Park Avenue, and he has advised countries such as the United Arab Emirates on their banking system.
Specifically, what’s next for Farkas?
When this question was posed before the assembled faces at the State of CRE forum, with a playful grin he looked out and answered: “I’m not telling you!”
