H3 Management, a commercial real estate development and investment firm based in Fort Lauderdale, got its start at a time when most real estate projects in Florida – and everywhere else – were flatlining.
During the depths of the Global Financial Crisis in 2009, BH3’s three partners took over a partially-finished luxury condo development in Miami Beach—Terra Beachside Villas—secured millions of dollars to finish the project when banks weren’t lending a cent to anyone in real estate development and turned the insolvent project into a highly profitable condo property. This was the beginning.
From one unfinished project to billions in investments
Today BH3—run by Daniel Lebensohn and Greg Freedman, co-founders and co-CEOs, and Executive Chairman Eric Edidin—is a major player in commercial real estate with a national reach, having invested more than $2.5 billion in Florida, New York City, California and other locations.
The Swiss Army knife of real estate capital, it develops, invests in and manages high-end condominium, commercial and hotel properties, provides capital to real estate, construction and related enterprises, engineers deals for non-performing loans and invests in other businesses, such as a recent venture in outdoor advertising.
The firm—which also has offices in New York City and Denver, Colorado—currently has almost $1 billion in assets under management and is developing over five million square feet of projects with a total completion value estimated at $5 billion.
“We’re like those Russian dolls,” Lebensohn told SFBW. One doll handles distressed debt, where the firm got its start, while inside are dolls representing real estate development, capital investment, lending and advertising.
How did all this happen?
The 2008 financial crisis and the tsunami of failing real estate loans it created brought together Lebensohn and Freedman to discuss an opportunity in South Florida … Terra Beachside, which was 60% complete when its developers—Sieger Suarez Architects of Miami—ran out of money.
Lebensohn in 2008 was an attorney with extensive experience in real estate working in New York City in a joint venture with Edidin, a co-managing partner in a capital management firm that handled distressed debts (i.e., bad loans) and invested in a variety of other assets. “My firm wanted to get into distressed debt and Daniel wanted to get out of law and into real estate,
so we formed a partnership,” Edidin says.
Born and raised in Fort Lauderdale, Freedman was working here at a private lending firm that made bridge loans for real estate projects, renegotiated problem loans and provided other financial services.
After Edidin introduced the two, Lebensohn and Freedman decided to meet at the Sagamore Hotel on South Beach. “We intended to spend about an hour together but got along so well we met for three,” Freedman says.
And Lebensohn brought his father—a Holocaust survivor from Austria who is now 93 years old—to the meet. A multifaceted man with a long career in teaching and mathematics, as well as a former commander at the U.S. Merchant Marine Academy, he inspired his son. “He always dabbled and invested in smaller rental properties and dragged me on the hunt for opportunities,” Lebensohn said.
A few months later and back in New York, “I was calling banks, looking for deals in Florida,” Lebensohn said. “Everything in Florida real estate was shut down … all the cranes had stopped working.” Searching lists of distressed loans, he found “this beautiful, 116-unit asset at 6000 Collins Avenue in Miami Beach—Terra Beachside. A few other guys were also looking at the deal, so I called Greg to see if he knew anything about it.”
A “good deal” that gave BH3 its name
“Neither one of us had any money, and we had no business plan,” Freedman said. “But we knew Terra was a good deal for us.” It was a well-conceived project that crashed into a financial crisis.
In 2009, the two were ready to negotiate a takeover of Terra by acquiring a distressed loan that had originally financed the project. During a computer conference, the financial group discussing the deal offered Lebensohn (in New York) and Freedman (in Florida) very unacceptable terms.
Annoyed, Lebensohn texted Freedman, “What do these guys think we are, three baggage handlers?” The text—meant to be private—appeared on all the computer screens.
Despite this somewhat embarrassing texting incident, Lebensohn and Freedman successfully negotiated the deal and assumed control of Terra for just under $20 million with funding from MSD Capital (now called DFO Management), the family investment office of Dell founder Michael Dell.
At the time, Lebensohn and Freedman were working with another partner, Charles Phelan, and the three decided to name their firm Baggage Handlers 3, or BH3 Management. The company bought out Phelan in 2017 and Edidin joined the partnership in 2020, also becoming a baggage handler.
Watering the bamboo
Terra was BH3’s first project and a test of the three partners’ skills.
“We like to joke that on our first distressed debt deal (Terra), we had no one else so we did everything,” Lebensohn said. “Some days we had to water the bamboo at the project site and some days we had to deal with irate subcontractors that hadn’t been paid. It was really complex. We had to finish construction, deal with legal aspects, market and sell units. Our first office was in a 2-bedroom apartment in Terra where we could see everything that was going on.”
“At the time we were not development guys,” he added. “We cut our teeth on this project. But what we had was common sense. The project was a myriad of common sense decisions and we brought on smart people to work with us. You don’t have to know everything. You have to know that you don’t know everything.”
After obtaining the new financing, the BH3 partners took over the deed and decided to work with Sieger Suarez Architects, who were Terra’s original architects, contractor and developer.
In contrast to many distressed takeovers, BH3 decided to work amicably with the project’s original developer. “We basically took an adversarial situation, we bought in and became the project’s bank,” Edidin said. “These are good people, and this should be a good project. Let’s keep them involved and cooperate. How do we make this a win for both sides?”
The collaboration worked well. Terra was completed in mid-2010 and turned out to be highly profitable for BH3, Lebensohn said. BH3 later joined forces again with Sieger Suarez on other projects.
More successful ventures
BH3 went on to participate in scores of new projects as a developer, partner, lender or investor. These include Privé at Island Estates in Aventura (twin 16-story luxury condo towers built on an island), 125 Greenwich (a super tall residential tower in Manhattan) and Trump Hollywood (200 beachfront luxury condos).
It is currently working on a spate of other enterprises, including Watson Harbour (mixed-use project on Watson Island in partnership with Fort Lauderdale-based Merrimac Ventures), the Mondrian Hallandale Beach (luxury condos), The Raleigh (hotel and residences in Miami Beach) and Icon Las Olas (luxury residences in Fort Lauderdale developed by the Related Group). The Mondrian project forms part of BH3’s strategy of investing in branded developments, which include the Viceroy Group and Ritz-Carlton.
“Pretty much everything we do is complicated. If it were easy, probably someone else would do it,” Edidin said. “With our backgrounds, we can bring a lot of synergies to a project that another buyer can’t.”
High praise for BH3
Nitin Motwani, a major player in U.S. real estate development and a partner with BH3 on Watson Harbour, had high praise for the three “baggage handlers.”
“BH3 brings a strong sense of teamwork, depth, and professionalism to their projects, and they evaluate opportunities from all vantage points—including
development and design, market conditions, and the ability to execute,” says Motwani, a managing partner at Merrimac Ventures and at Miami Worldcenter Associates, where he has overseen development of the $6 billion Miami Worldcenter.
“Our family has known the partners at BH3 for many years given our Fort Lauderdale roots, and it was only a matter of time before we would work together,” he added. “When Daniel, Greg and Eric presented their vision for Watson Harbour to our team a couple of years ago, we were immediately drawn to the idea of creating a partnership that would finally activate Watson Island after more than two decades of stops and starts. Miami voters approved our vision last fall, and we’re now in the pre-development phase.”
“Working with BH3 has been a great experience, as our firms share many of the same values – beginning with a commitment to investing in our South Florida community over the long term.”
