Visiting friends in Miami two years ago, German stock-and-commodities trader Thomas B. Kramer was astounded by what he saw. Just blocks south of Miami Beach's trendy Art Deco district was prime oceanfront property, on which sat mostly boarded-up hotels and seedy apartments and houses. Earmarked by the City of Miami Beach for redevelopment, the blighted South Pointe section had been largely overlooked by builders eager to capitalize on the cachet of the revitalized area to the north. And though his only foray into real estate--in Germany--ended disastrously, Kramer thought he knew a cheap commodity when he saw one.
Within 48 hours of that visit, Kramer embarked on a $100 million real estate buying spree. During the following year, he bought 45 acres of land in South Pointe (undervalued, at least in his view), plus development rights for more. He also gobbled up other properties, including mansions in Indian Creek and nearby Star Island, where he is now building himself a palatial, 50,000-square-foot home.
PILES OF CASH. Almost overnight, the rich but neophyte developer has emerged as the key player in what is now one of the nation's hottest real estate markets. He could end up changing the face of Miami Beach. As the major landowner in South Pointe, Kramer, 37, is spending heavily--about $20 million thus far--on architects and lawyers to help him realize his grand vision of a playground, a la St. Tropez, for the rich and ultrarich. His blueprint for South Pointe and other portions of Miami Beach includes luxury high-rise condominiums and shopping on the scale of Rodeo Drive in Beverly Hills. Betting that Florida voters will give the O.K. to casino gambling this fall, he's also teaming up with Las Vegas casino king Stephen A. Wynn to build a megaresort-cum-gambling casino in South Pointe.
Along the way, however, the flamboyant Kramer has stirred up a torrent of controversy, not just about his building plans but about his personal behavior and his questionable reputation in Germany. He faces a buzz saw of opposition from vocal Miami Beach residents, who charge that his high-rise vision, especially a casino, will obliterate the area's low-rise, residential character--in part by drawing hordes of bus-riding gamblers.
"He's not a beloved person in this city," explains Miami Beach Mayor Seymour Gelber. "It's difficult for a developer who wants to go to the height of the sky to be liked. I don't look on him as an evil person invading our city and trying to destroy it, but I don't agree with his concepts, and people in the area don't either."
Kramer-bashing, in fact, has become something of a sport. The local press details at length the battles over his plans, wonders at his seemingly inexhaustible supply of cash, and chronicles his brushes with the local police. Recent incidents include a fistfight in a local nightclub and a driving-while-intoxicated arrest, which will be challenged, a Kramer spokesman says. More substantively, detractors say he is too new to the real estate game to realize his plans.
Brushing off the criticism as mere jealousy over his wealth, Kramer appears undaunted by the huge legal, financial, and public-relations obstacles he now faces. "Educated developers were afraid of the risks," says Kramer. "I'm a double Taurus." That's why, he says, he's willing to spend millions a year just on overhead. Even so, he says, "I'm still in very cheap."
But Kramer acknowledges that a series of early missteps cost him time and credibility. In October of 1992, for instance, he opened a nightclub called Hell, which generated a hailstorm of negative publicity. After the mobbed opening, according to allegations in local press reports, Kramer instructed doormen not to admit any more gays, and the club closed just months later. Kramer denies the charges.
Kramer says he now realizes that he is not a nightclub operator or even a developer. "I'm not a detail guy," he admits. He is teaming up with some experienced developers. "I think the only real value that I can bring to the table is a very good sense for timing," he says.
And while real estate experts regard Kramer as everything from naive to visionary, they agree that his timing appears impeccable. After decades of stagnation, condo and hotel construction is booming. The city commission is considering proposals for an 800-room convention hotel, the first major hotel to be built there in 20 years. Property values are rising, with the South Pointe section up nearly 37%.
The cachet of the Art Deco district is now filtering down to South Pointe. La Voile Rouge, a jet-set resort, has already opened a site in South Pointe. The stage seems set for Kramer, but as real estate expert Martin W. Taplin puts it, "the devil is in the execution."
That's a devil Kramer has faced before. Son of a German stockbroker, Kramer vaulted into prominence among the Eurorich by correctly betting that the market would tank in October, 1987, and pocketed $30 million, according to German press reports. In 1989, he started a fund to invest in real estate in what was then East Germany, before unification was assured. But negative articles about the riskiness of the deal scared away investors, and the company filed for bankruptcy in April 1992, owing creditors $1.1 million. One of the articles was in the Gerlach Report, a respected German investment newsletter. Heinz Gerlach says Kramer "lives his life at the costs of others" and will "never" be "a success in real estate."
NO DEBT. Kramer says he has repaid creditors every penny. He blames the failure of the venture on rumors spread by his father-in-law, Franz Burda, managing director of F&F Burda, an industrial holding company. Kramer says Burda had opposed him in marrying Burda's daughter, Catherine, and had threatened to destroy him. Burda won't comment.
With real estate financing hard to come by, Kramer has had to use mostly his own money, made largely from trading. Relatives and Catherine's step-
father-in-law, Siegfried Otto, majority shareholder of banknote printer Giesecke & Devrient, have also given him undisclosed sums. With no debt burden, he says, he can afford to spend a decade developing his investments.
It may take that long--or longer. Two proposed projects are under legal attack. One, a 25-story oceanfront con-
dominium, is being challenged by owners of a nearby hotel that has sued the city and Kramer's company over the way the project was approved.
"Kramer may be in the right spot at the right time now, but by the time his projects get completed, things could change," says Michael Cannon, an appraisal expert. Indeed, Florida history is replete with stories of developers whose visions fell victim to hurricanes or poor planning. Whether Kramer avoids that fate will depend, among other things, on whether his sense of timing remains true.