Real estate investor looking for trouble

Published October 3, 2013
Chicago Real Estate Daily

Shaoul Mishal hopes he has found a real estate market in worse shape than Tampa, Fla. — Chicago.

Mr. Mishal is president of Gamla-Cedron Group, a real estate investment firm backed by Israeli investors. The firm is based in Aventura, Fla., about 17 miles north of Miami, but has mostly focused on fractured condominium developments in the Tampa Bay area, amassing a portfolio of 1,000 Class A garden-style rental units.

In 2009, Forbes magazine ranked the Tampa area the ninth-worst housing market in the nation. Three years later, Tampa had the 12th-highest foreclosure rate among major metropolitan areas, according to RealtyTrac Inc., an online marketplace for distressed real estate.

Now, Mr. Mishal, 48, is looking in Chicago’s most sought-after neighborhoods, looking to invest up to $100 million in troubled properties.

But the Tel Aviv native has changed his tactics. His first Chicago acquisition was 39 unsold condos at 757 N. Orleans St. last year.

But Mr. Mishal shifted gears. In May, he paid $6.1 million for a 45,000-square-foot office building at 520 W. Erie St. in River North.

“When we came to Chicago, our original business plan was to look for residential,” Mr. Mishal said. “Then we came across 520 Erie and we learned about the potential of these loft/boutique office buildings.”

He followed up that acquisition last week with the $3.4 million purchase of a fully leased 24,000-square-foot loft-office building at 925 W. Chicago Ave., just west of the Chicago River.

He hasn’t entirely given up finding bargains in the housing market. About a month ago, he bought three unfinished condos and 3,500 square feet of ground-level retail space at 925 N. Larrabee St., a 12-unit condo building near the former Montgomery Ward complex.

Mr. Mishal said he is chasing deals like those he saw in the Tampa Bay area two or three years ago, before distressed opportunities began to evaporate.


“The markets are recovering, which is good, but it means also that the prices will go higher,” resulting in “less and less opportunity” for the firm, he said.

That’s especially true in areas like River North, River West and the West Loop, said Matt Garrison, co-founder of Chicago-based investor South Street Capital, another opportunistic investor.

“There’s always unique situations that can cause someone to get into distress, but I don’t see a giant backlog of it,” Mr. Garrison said. “And I don’t think there will be a giant backlog of it for the next several years.”

Mr. Mishal spent four years in the Israeli army before earning his law degree from the Tel Aviv University Law School in 1995.

After spending nearly four years practicing real estate law, in 1999 he joined New York-based Elad Group, which owns several billion dollars in commercial and residential properties throughout North America, according to its website. At Elad, Mr. Mishal formed a Florida-based investment unit, now known as Elad National Properties, that focused on multifamily properties throughout the East Coast, Midwest and Texas.

He’s not completely unfamiliar with the Chicago market. At Elad, he led the 2005 acquisition of a 762-unit apartment complex in southwest suburban Woodridge. The purchase price could not be determined.

He formed Gamla-Cedron in 2008 and splits his time between Chicago, Florida and Israel, where his family lives.

“I think there are still good opportunities for us” in Chicago, he said. “We really believe in the market and the strength of the market.”