MIAMI-As South Florida's real estate market begins to thaw every so slightly, savvy investors like Aztec Group's Ezra Katz are in the process of making big moves in 2012.  

Katz has lived through a real estate cycle or two during his 30-year tenure as CEO of Aztec Group, the third-party merchant banking and investment sales firm he founded in 1981. And after sitting patiently on the sidelines for the past few years in the wake of the historic financial meltdown that left the nation's capital market's all but frozen, Katz is preparing to come out swinging in 2012 as the right opportunities present themselves.

Aztec’s specialty lies in bringing buyers and sellers—institutional and private—to the table and securing financing to get deals done. The firm has handled more than $10 billion in transactions during the past decade. Under Ezra’s leadership, Aztec has been involved in transactions ranging from the $72 million sale of Mayfair Shops, the $70 million financing of Dadeland Station, the $157 million capital investment by Colony with the Michael Swerdlow Companies and the formation of Progressive Development Company in Charlotte.

GlobeSt.com caught up with Katz to get his take on what 2012 holds. Katz also shares some of the secrets to his long-term success.

GlobeSt.com: What does 2012 hold from a real estate transaction and investment standpoint? How will 2012 be different than the past few years?

Katz: Aztec Group’s affiliate—Mayan Properties—was a partner in 68 assets across a broad range of real estate uses and classes at the end of 2005. As a result of an aggressive disposition program, Mayan was left with 12 properties by 2007. We’ve largely been on the sidelines during the past three years, but we anticipate seeing more transactions in 2012 as principal investors with regard to our capital markets transaction business, where we will work to secure financing and equity on behalf of our clients, both from traditional and alternative sources of financing.

GlobeSt.com: How has Mayan’s investment strategy held up over time?

Katz: Our strategy has been consistent over the past 20 years. For starters, we work with operating partners who we trust implicitly and who share mutual respect for our team. Second, we engage investment partners who embrace open communication about concerns and challenges. And third, we enter every transaction with an exit strategy based on sound math and market fundamentals.

Projected returns on investment vary from property to property, so we micromanage the asset and adjust the strategy when necessary. For example, we purchased two Boca Raton office buildings in late 2004 for $15 million with plans to hold the asset for five years or more and ultimately sell for at least $20 million. Little more than a year later, we received an unsolicited bid for $21 million and decided to test the market. We ended up selling the buildings for $22.5 million within just 18 months of the purchase. This is a good example of how we stay flexible and modify our strategy in line with market dynamics.

GlobeSt.com: What are the salient dynamics shaping up that will impact sales activity and access to financing?

Katz: There is more than $300 billion worth of commercial real estate loans set to mature over the next two years. This is going to significantly impact the available capital as existing asset owners look to refinance, and buyers seek finance their acquisitions.

The properties most likely to attract financing will be those generating consistent cash flow; and those owned by owners that don’t have legacy issues, i.e. litigation, bankruptcy. Borrowers seeking construction financing will continue to be challenged, and very few will qualify to meet the underwriting standards of banking institutions. Regulatory requirements continue to weigh heavily on bank lending, often resulting in negative decisions and making it difficult to finance most borrowers.

GlobeSt.com: What has the South Florida real estate market—investors, developers, lending community—learned from past mistakes and cycles and what can be done to ensure these mistakes don’t happen again?

Katz: Many investors and financial institutions alike have short memories. The financial sector is still finding its footing following the economic collapse, but banks and lenders will ultimately forget the pain of past three years and revert to past habits in the next decade. There is a widening gap between available capital and the shrinking number of quality transactions truly deserving of that capital.

People, by human nature, are compelled to spend available capital and this causes investors to make mistakes. The lesson: the desire to make money too often guides decisions, rather than smart market and business principles. Real estate investing is not a recreational hobby. Unfortunately, the lessons of the past have not been used as a model for deterrents or fiscal policies which instill discipline within the lending community.

GlobeSt.com: Are banks getting healthier, and how will a possible recovery impact real estate?

Katz: Banks are in relatively healthy shape as compared to four years ago, and I fully expect the level of lending to continue to grow. However, I also believe the underwriting standards for making loans will be much more conservative, and therefore borrowers will have to provide more equity in each transaction, as well as support the loans being requested by a strong balance sheet.

GlobeSt.com: Gambling and destination resorts … good or bad for Miami?

Katz: I am of the opinion that gambling is already here, in that we have had various forms of gambling via the pari-mutuels and Indian casino venues such as the Seminole Hard Rock in Hollywood. The challenge we face with regard to any gambling venue has to do with impact on our quality of life, as well as the infrastructure required to facilitate and accommodate the explosion of employment and visitors.

Our highway and road systems are inadequate to facilitate major or mega casino destinations. More importantly, Florida has not enacted appropriate legislation to monitor gaming and assess the impact on the immediate community. Our community must get definitive answers to fundamental questions, such as traffic and impact assessments, including the burden on our police and our governmental agencies. If we are able to tackle these issues with responsible actions, I am inclined to support gaming in South Florida.