The Point Man of Five Points (Sara/Mana edition)
The Point Man of Five Points (Sara/Mana edition)
Ali Ebrahimi is accustomed to overcoming obstacles (ask him about Ayatollah Khomeini). If selected, his Plaza Verdi project would make him downtown’s largest developer.
By Sean Roth
Real Estate Editor
The odds against Ali Ebrahimi appear almost insurmountable. The president and owner of Ersa Grae Corp., the Houston-based developer of downtown Sarasota’s Plaza at Five Points, is currently the favorite to develop a second downtown project – a city-owned block at Cocoanut and Palm avenues. But the obstacles for Ebrahimi’s proposed Plaza Verdi are substantial.
To begin with, Ebrahimi’s proposal contains a tricky mix of combined uses difficult for any developer to pull off – office, retail, condominium, theater and parking spaces. The size is another formidable challenge – 1 million square feet of space, slightly less than what Irish developer Paddy Kelly is proposing for the Sarasota’s Quay but easily the largest project in the downtown core.
Now add the fact the site has a history of at least two previous development attempts that failed. And, as many developers have found out, negotiating with the city of Sarasota often turns out to be expensive and protracted and comes with no assurances of a successful outcome.
Despite all of this, Ebrahimi is facing the challenge calmly. He has faced much worse in his 62 years. Just ask him about the Ayatollah Khomeini, Iran’s madman revolutionary dictator in the early 1980s.
For the past two years, Ebrahimi, whose wealth was confiscated by Khomeini two decades ago, has established himself as a get-it-done developer in downtown Sarasota. Ebrahimi is building the largest mixed-use project in the area, the 180-foot tall, 500,000-square-foot Plaza at Five Points at First Street, Central Avenue and Main Street.
The fact he has begun construction on Five Points is a testament to Ebrahimi’s skills. As was the case with the Plaza Verdi property, two developers had previously tried to build projects on the Five Points site and failed. In addition, the Five Points development plan was not easy to pull off. To get the project financed, Ebrahimi needed commitments. But he went into the market with office lease rates of $25 a square foot triple net, which is at the top of the scale in downtown Sarasota; retail rates at $35 a square foot triple net; and office purchase/option prices of $295 a square foot, not including parking. Despite this, Fuve Points resident and commercial is selling out quickly.
While Five Points is not scheduled for completion until mid-2005, 47 of the 50 condominium units in the project have been sold, and 70% of the office and retail space has been preleased or pre-sold. To put that absorption in perspective, the entire Sarasota downtown area absorbs between 35,000 and 40,000 square feet annually; Ersa Grae has commitments from commercial users for roughly 70,000 square feet – almost double the region’s total commercial absorption yearly. To date, the developer has announced that Fifth Third Bank has committed to occupying 35,000 square feet in the building, and VenVest Corp., an air-conditioning and plumbing services management company, will take another 35,000 square feet.
The success of Five Points bolstered Ebrahimi to try downtown Sarasota again with Plaza Verdi. As it is currently envisioned, the development would create a 100-suite hotel, 116 condominium units , a 10-story mixed-use building, an 840-space parking garage, new facilities for the Golden Apple Dinner Theater and Sarasota Opera and a pedestrian galleria that would link the project with Five Points.
Last week, the city of Sarasota’s evaluation committee selected Plaza Verdi as the committee’s top choice for the site. The proposal must still go before the Community Redevelopment Advisory (CRA) Board and the city commission to earn the right for a 90-day price negotiation session with the city.
Founded in 1977, Ersa Grae, which now employs 20 people, has developed about $500 million worth of real estate nationwide. The company develops residential subdivisions, office buildings, shopping centers and condominiums. Most of Ebrahimi’s development has been focused in Texas, California, Tennessee and Florida.
Ebrahimi grew up the son of a farmer in Tehran, Iran. Following high school, he left Iran to attend the University of Maryland. After obtaining a bachelor’s degree in civil engineering, Ebrahimi went on to receive a master’s in engineering from Catholic University, with a specialty in urban planning.
He worked for the Maryland and California departments of planning as a project engineer and planner for a few years before returning to Iran in 1968. Shortly thereafter Ebrahimi and two fellow engineers founded Gostaresh Maskan, which means home and development in Farsi (Iran’s principal language).
“We started as a subcontractor,” Ebrahimi says. “We would show the government that we could do the job, and they would give us the working capital to build a home.”
About three years later, his partners decided to break up the company. “They wanted to do more public projects,” says Ebrahimi, “and I wanted to keep building homes.”
Ebrahimi had the right idea. In eight years, Gostaresh Maskan was the largest residential company in Iran. At its heyday, the company was developing about 2,000 units a year and the requisite infrastructure to support them. The company developed about 14,000 homes in Iran.
While he was setting up Gostaresh Maskan, Ebrahimi met Suzanne Tunnell, an American who was working for Westinghouse Electric Co. in Iran. They married in 1977. It was a chance airplane flight that same year that caused Ebrahimi to start Ersa Grae.
“I read in one of the airline magazines about what a boom Houston was having,” Ebrahimi says. “I happened to have several people on my staff who had been born and raised in Houston. So I decided to build a company there.” Ebrahimi eventually created two development companies in Houston: the Ersa Corp. and the Grae Corp. Ebrahimi credits his attorneys at the time with creating the peculiar names. “They were boilerplate names,” he says.
Then in 1979, the Ayatollah Khomeini and his revolutionaries overthrew the government of Shah Mohammad Reza Pahlavi. Shortly before the shah left power in December of 1978, Ebrahimi had sent his wife and three children to join family in America.
“The country went through a period where it was lawless,” Ebrahimi says. It was just a chaotic situation.”
Ebrahimi choose to stay in the country and run his company, which at the time employed more than 5,000 people. “You wouldn’t have trouble if you changed to Islam,” he says. “But there were people like me who did not want to change. We were used to the American style of democracy. We were not about to change our clothes for a bunch of ayatollahs.”
Ebrahimi found himself the target of the militants. He was arrested five or six times. “They were arresting me because I was American-educated and had an American wife. I would never stay in jail for more than a few days. A government official would come and get me out because they wanted to make sure I would pay my workers. It kind of slowly dawns on you that it is getting very dangerous for people who were not in favor of Islamic revolution – people like me. There was not room in the country for us.”
So in July 1979, Ebrahimi decided he had to leave the country. He left clandestinely in the middle of the night. To this day, Ebrahimi declines to say how he left the country to protect the people who helped him escape.
Most of Ebrahimi’s extended family managed to immigrate to the United States. But financially, the revolution was ruinous. Ebrahimi lost his bank accounts, his home and his $100 million home building company to Khomeini’s government.
“(The Revolution) changed my ideological perspective, not really my business perspective,” Ebrahimi says. “Business is business no matter where you are. It just really reinforced my belief in modernization and democracy – not going back 500 years as the Islamicists advocated.”
Once out of Iran, Ebrahimi merged his two U.S. corporations into the Ersa Grae Corp. and directed the business into more commercial and high-rise development in Houston and Nashville. After the 1982 recession nearly wiped out Houston development, Ebrahimi turned to California and increased his activity in Nashville.
The company flourished. After the Houston market recovered, Ersa Grae sold off most of its California developments and started focusing again on Houston properties.
Ersa Grae currently owns and manages six shopping centers in Houston and Beaumont, Texas. The company owns two office buildings: the Westchase Bank Building in Houston and Metro Exchange Building in Nashville. In addition, Ersa Grae owns an apartment complex in Spring, Texas, and it is developing five planned communities in Houston.
What drew Ebrahimi to Florida? F. Fred Pezeshkan, president of Naples-based Kraft Construction Co. Inc., can take the credit. After opening the Sarasota office of Kraft a few years ago, Pezeshkan says he started to notice the growth in the Sarasota area. “I saw the place where Five Points is and thought, ‘Gee, this has probably been for sale for a couple years. I need to find a developer and make this happen,’” Pezeshkan says.
One of the developers Pezeshkan contacted was Ebrahimi. The two had been friends and business partners in Iran. They had kept in touch off and on since they both immigrated to the United States in the late 1970s but had not had any business dealings since. Kraft Construction is now the general contractor for all of Ersa Grae’s Florida developments.
Ebrahimi says the success of Five Points has so far surpassed the company’s internal projections. Next on Ebrahimi’s agenda in Florida is co-developing a large condominium project in Naples, the Naples Bay Collection. The development calls for more than 400 condominium units, a marina, six acres of club facilities and about 150,000 square feet of retail.
“Right now, we don’t do any work in California,” Ebrahimi says. “We don’t want to be on two coasts. This way we can concentrate on the West Coast of Florida, Texas, and we still have some office building in Nashville to sell. If we had to go into a third market I would probably pick Las Vegas. But we don’t need to go into a third market.”
In the Gulf Coast, Ebrahimi says, Ersa Grae is still looking for other projects, including in Manatee County. “But we haven’t been able to find anything else so far,” Ebrahimi says. “There are a lot of opportunities for development in the West Coast of Florida. We like strong economies where we can go into the markets and do high-density commercial and land development. I like Bradenton. We would like to develop subdivisions. We typically like to find five to 600 acres on a site with water access. We have done a lot of those in Houston, but we can’t find the land here.”
The following shows the latest evaluation, as of on Feb. 19, from the evaluation committee ranking proposals for redevelopment of city-owned land on Palm and Cocoanut avenues. A lower score represents the evaluators’ preference for a project.
1. Ersa Grae Corp.8.5
Principals: Ali Ebrahimi
2. Sarasota Main Street Development Team (Southcoast Partners Inc. and LB Jax Development LLC)12
Principals: Bill Morris (Southcoast Partners) and Chris Brown and Michael Langton (LB Jax Development)
3. Arcadia Land Co.14
Principals: Robert Davis, Christopher Leinberger and W. Joseph Duckworth
4. Benderson Development Co. and Sarasota Commercial Management Inc.15.5
Principals: Nathan Benderson, Randall Benderson and Dr. Mark Kauffman