Friday, July 14, 2006

Three Area Properties Trade for Total $30M


MIAMI-Three area apartment complexes, totaling 424 units, have traded for a total $30 million or an average $70,755 per unit. Two of the three properties will be converted to condos. Marcus & Millichap Real Estate Investment Brokerage Co. handled the transactions.

Sunshine Lakes LLC paid Sunshine Lakes Apartments Ltd. $10.45 million cash, or $50,240 per unit, for the 208-unit, 121,422-sf Sunshine Lakes Apartments at 10900-10960 NW 14th Ave.
The seller received “multiple competitive offers from qualified buyers” for the 96%-occupied, 11-acre property, says Kevin Morris, an associate director in the Fort Lauderdale office of Marcus & Millichap. Morris represented the seller. Steve Sussman, a senior associate in the firm’s Miami office, negotiated for the buyer. The property is being converted to condominium homes.
In Fort Myers, the 123-unit Green Tee Apartments at 1830 Maravilla Ave. generated a sale price of $12.5 million or $101,626 per unit. Green Tee LLC, which acquired the property from Green Tee Apartments LLC, is also converting the apartments to condos.

Tal Frydman, a senior investment associate and director in Marcus & Millichap’s Fort Lauderdale office, and Andrew Bethke, a multifamily investment specialist in the same office, represented buyer and seller. “A shortage of housing units in Lee County will support the rapid sellout of all phases of this conversion,” Bethke says. Condo homes are selling for $170 to $225 per sf in the Fort Myers market, the broker says.

The 93-unit Applegate Apartment community in nearby Sarasota commanded a sale price of $7.1 million or $76,344 per unit. Forest Acquisition Fund LLC acquired the asset at 1500 Lockwood Ridge Rd. from Aquarius of Lockwood LLLP. The 3.95-acre property houses five two-story and three-story buildings that have eight efficiencies, 29 one-bedroom units and 56 two-bedroom units.

Senior investment associate Bob Goldfinger, senior associate Jay Crotty and associate Tim Johnson in the Tampa office of Marcus & Millichap negotiated for the seller. “With limited land and increasing construction costs, Applegate will have continued investment desirability,” says Goldfinger. “With the large number of apartments converted to condos in Sarasota County, this property is poised for significant rent growth in the near future.”

$200M JV Aims for $600M in New Assets


MIAMI-Locally based Cardel Hotels, founded by developer Carlos Rodriguez, is on a fast track to acquire and develop $600 million in hotel assets within the next 24 months. Rodriguez has a $200-million acquisition chest, thanks to a strategic equity joint venture partnership with a private equity fund arranged by New York-based Carlton Hospitality Group.

Howard L. Michaels, chairman of Carlton Advisory Services, announced the partnership Wednesday, July 12. Cardel Hotels will be the asset and joint venture manager. Driftwood Hospitality will manage all of the properties acquired or developed by the fund.

Two transactions have already closed. In the first deal, Cardel used $22 million of equity to recapitalize its 123-room Hampton Inn & Suites in Miami and the 250-room Crowne Plaza in Sawgrass. The second transaction was the acquisition of three Bradford Homesuites totaling about 400 rooms in Houston, North Dallas Addison and the Denver Tech Center. Michaels says all three properties will be totally renovated and repositioned as either a Hyatt Summerfield Suites or Staybridge Suites.
Michaels says the joint venture plans to invest $100 million in equity by year’s end with the initial two transactions representing about 30% of that investment. In a prepared statement, Rodriguez says his company is “aggressively expanding throughout the US and we anticipated this aggressive growth trend to continue.”

Carlton Hospitality Group executives John Bralower, Brendan P. Sullivan, Stephen Scorgie and Will Lee arranged and structured the fund’s partnership.

MIAMI-With the Federal Reserve raising interest rates for the 17th time in a row on June 29, many in the real estate are questioning how the rate change will impact the real estate market.

In a statement regarding the rate hike, the Federal Reserve said “recent indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling on the housing market and the lagged effects of increases in interest rates and energy prices.”
Among those questioning the future of the real estate market is John Burford, senior vice president and chief economist with the International Bank of Miami. With the central bank raising its lending rate another 25 basis points to 5.25%, Burford sees a rise in both short- and long-term interest rates and a dampening of the real estate market. “Increasing interest rates increases the cost of obtaining financing for both commercial and residential real estate,” he says. “This makes it more difficult for people to buy property at higher prices.”

Burford says the Federal Reserve’s actions, however, are a deliberate attempt to slow the demand for real estate, put a damper of escalating prices and keep a lid of inflation. Thus far, buyers have been able to afford the rising prices in the real estate market because unemployment levels have been low and wages have increased. In Florida, the higher interest rate environment is offset somewhat by the types of buyers attracted to the area. Many hail from the Northeast or other parts of the world where real estate is more expensive and Florida is a relative bargain, he adds.

Burford says the Federal Reserve will pay close attention in future months to economic indicators, such as automobile and housing sales, as it considers whether to raise interest rates again. With signs that unemployment will remain low and wages will rise, Burford anticipates the Fed may raise the rates a few times more before it possibly lowers the rate. “The important thing to note is that rising interest rates reflect a growing economy. Falling interest rates reflect a slowing economy,” he says.

Falor Cuts Deal With Hilton Heir

MIAMI BEACH-In a celebrity market where few transactions raise eyebrows anymore, Chicago hotelier Robert Falor and Nicky Hilton of the Hilton Hotel family are closing a deal that will rename two of Falor’s Miami Beach properties with a new “Nicky O, a Nicky Hilton Hotel” brand, South Florida sources confirm.

The hotels to be renamed are the 95-room, 71-year-old Edison Hotel at 960 Ocean Dr. and the 64-room, 67-year-old Breakwater Hotel next door at 970 Ocean Dr. According to Miami Beach general contractors who have worked with Falor on his other properties, the hotelier is completing a two-year, $9-million renovation and reconfiguration of the two properties that are being transformed into one 113-suite condominium hotel.
Hotel suites will be sold for about $500,000; penthouses for over $1 million, Miami Beach hotel marketing sources intimate with the project tell GlobeSt.com. Falor bought both hotels in September 2004 for $22 million, as GlobeSt.com previously reported.

The Falor-Hilton deal involves the 22-year-old sister of personality Paris Hilton licensing her name specifically to the Falor properties in South Beach and possibly completing similar deals for other Falor-owned properties across the country, real estate sources in a position to know tell GlobeSt.com. Nicky Hilton is best known for her “Chick” design line of clothes and handbags, according to fashion industry sources.

MIAMI BEACH-In a celebrity market where few transactions raise eyebrows anymore, Chicago hotelier Robert Falor and Nicky Hilton of the Hilton Hotel family are closing a deal that will rename two of Falor’s Miami Beach properties with a new “Nicky O, a Nicky Hilton Hotel” brand, South Florida sources confirm.

The hotels to be renamed are the 95-room, 71-year-old Edison Hotel at 960 Ocean Dr. and the 64-room, 67-year-old Breakwater Hotel next door at 970 Ocean Dr. According to Miami Beach general contractors who have worked with Falor on his other properties, the hotelier is completing a two-year, $9-million renovation and reconfiguration of the two properties that are being transformed into one 113-suite condominium hotel. Hotel suites will be sold for about $500,000; penthouses for over $1 million, Miami Beach hotel marketing sources intimate with the project tell GlobeSt.com. Falor bought both hotels in September 2004 for $22 million, as GlobeSt.com previously reported.

The Falor-Hilton deal involves the 22-year-old sister of personality Paris Hilton licensing her name specifically to the Falor properties in South Beach and possibly completing similar deals for other Falor-owned properties across the country, real estate sources in a position to know tell GlobeSt.com. Nicky Hilton is best known for her “Chick” design line of clothes and handbags, according to fashion industry sources.

Ace Takes 54,000 SF in Airport Submarket

MIAMI-The Airport West-Dade industrial submarket is showing continued activity with Ace Hardware Corp.’s lease of 54,570 sf of space at the Beacon at 97th industrial park at 2000 NW 97th Ave. The lease was for a five-year term with an approximate net lease value of $2.5 million.

Michael Silver, CB Richard Ellis first vice president, represented Ace Hardware. Rafael Villamizar, of Newmark Knight Frank, represented the landlord, Faith Group Ltd. Silver tells GlobeSt.com that Ace Hardware will use the space for distribution of its products. Among reasons Ace chose the space was the high level of security at the park, which contains security cameras, protective fencing and other features. “This is a unique industrial space,” Silver says. “It has a higher level of security than other industrial parks in the area.”
Silver adds that the lease is indicative of the strong Airport West-Dade submarket, which is experiencing record low vacancies of 4.5% and record high average lease rates and sales prices. The submarket’s close proximity to both the Miami International Airport and the Port of Miami is among reasons companies elect to lease space. “Demand for space in this area combined with very low vacancies are characteristics of a landlord-driven environment. In many instances, occupancy-related expenses rank just behind labor as the second-highest fixed cost of running a business.”

Silver says that CBRE explored different scenarios for Ace Hardware before this space was chosen. “Through creative problem solving and transaction structuring, as well as sophisticated analytical models, we were able to find the optimal solution to Ace’s real estate requirements,” Silver says.

Monday, July 10, 2006

Investment Firms Buys Center for $48M

NORTH MIAMI BEACH-Boca Raton-based investment firm Woolbright Development Inc. has purchased the Intracoastal Mall at 3501 Sunny Isles Boulevard for $48 million. The 233,300-sf shopping center is located on the northeast corner of Sunny Isles Boulevard and N.E. 35th Ave.

The center’s anchor tenants are Winn Dixie, TJ Maxx and Old Navy. Mike Fimiani, Woolbright’s executive vice president of leasing and marketing, tells the property is a good fit with Woolbright’s portfolio. “This is a well-placed property in a strong market that is perfect for redevelopment, which is our core business,” Fimiami says.
Woolbright plans to make renovations to the shopping center, including additional landscaping and improvements to the façade. “This center was particularly attractive due to its location on the Intracoastal Waterway in an affluent area of North Miami Beach,” Fimiami adds.

Fimiami says that Winn Dixie’s bankruptcy status was not a concern for Woolbright. “We do not know the status of Winn Dixie, but it’s a well-positioned property and we know we can make it successful regardless of the outcome with Winn Dixie.”

With the acquisition, Woolbright now owns 25 retail properties throughout Florida. Other retail properties the company owns in Miami include the 67,000-sf Carter Square and the 325,000-sf London Square in Kendall, the 96,500-sf Kendall Corners in Miami and the 261,000-sf South Dade Shopping Center in Cutler Ridge. The company plans to continue acquiring retail properties in the future. “We are always looking to acquire additional properties and are negotiating several deals at all times,” Fimiami says.

Friday, July 07, 2006

Trump Project Receives $210M Construction Loan

MIAMI BEACH-The 391-unit Trump Royale condominium project has received a $210-million construction loan. The 55-story project is at 18201 Collins Ave. in Sunny Isles.

The borrower in the transaction was Royale Florida Enterprises Inc., whose principals include Michael and Gil Dezer, of New York-based Dezer Development. The financing was arranged by Bilzin Sumberg’s Real Estate Group partner Carey Stiss and associate Jason Myers on behalf of the lender Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc. Kevin Rostowsky, who leads Merrill Lynch’s southeast division in Atlanta, was the principal lender contact for the transaction. The closing date of the loan was June 28.
Bilzin Sumberg Real Estate Group partner Carey Stiss tells that the financing will pay for the majority of the construction of the project. The developers obtained a $40-million loan from Bank of America to cover land acquisition costs and begin construction in fall 2005. Merrill Lynch purchased the existing loan. Stiss adds that Merrill Lynch began offering construction loans about a year ago. “This is one of the largest loans issued by them,” Stiss says.

Developers of the project are Dezer Development and New York-based Donald J. Trump Organization. The Trump Royale is the third phase of the $700-million Trump Grande Ocean Resort & Residences project. The first phase consisted of the 372-unit Trump International Sonesta Beach Resort condo hotel which opened in April 2003. The second phase consisted of the 55-story, 278-unit Trump Palace which opened recently. Occupancy at the Trump Royale is scheduled for 2007.

$130M Funds ArTech Condo Construction

AVENTURA, FL-Developers have closed on a $130-million construction loan for the nine-story, 232-unit ArTech condominium project. Construction on the project began earlier this year.

The financing was comprised of two loans. The senior loan from Corus Bank, NA totaled $130 million and was secured by a mortgage and an additional mezzanine loan was obtained from Colonnade ArTech Mezz LLC, an affiliate of Colonnade Properties LLC. “The strong presales and excellent design allowed the bank to provide the loan on a non-recourse basis and without participants,” says Corus Bank senior vice president Brian Brodeur.
Bilzin Sumberg corporate attorneys Marshall Pasternack and Sheila Bandari negotiated the operating and partnership agreements for the majority of the entities, including the negotiations with the lenders and among the joint venture partners. Bilzin Sumberg attorneys John Kuhn and Javier Granda handled all of the real estate aspects of the transaction. “The loan defies the conventional wisdom right now about financing. Lenders are still eager to make these types of loans to strong developers,” Kuhn tells.

Artech is a joint venture project of Miami-based Fortune International and Aventura-based Shefaor Development. Architects on the project are Uruguay-based Carlos Ott and locally based Charles Benson. Interior designers of the project are South Beach-based Urbanica Group. The building, which has nine stories and is located on 188th Street in an area known as “Thunder Alley,” is expected to be completed in winter 2007. Prices for the units start in the $500,000s.

Portion of Development Site Sells for $64M

AVENTURA, FL-A partnership controlled by Chatham, NJ-based Brian Stolar has acquired a portion of the Lincoln Pointe development site for $64 million. Development partners New York City-based Tarragon Corp. and Miami-based Shefaor Development were the sellers.

Under terms of the agreement, Tarragon and Shefaor’s ownership of the site was reduced to 79.5% and $14 million of preferred equity. The buyer has agreed to purchase the $14 million in preferred equity within 18 months or full ownership will revert back to Tarragon and Shefaor.
Under the agreement, Tarragon and Shefaor also granted the partnership a three-month option to purchase an additional 61% ownership for $12 million. If the partnership exercises the option, Tarragon will retain an 8% interest in the property and Shefaor about 10%. Shefaor has also been retained to coordinate and supervise the new development for a fee based on the ultimate sell-out value of the project. Tarragon chairman and CEO William Friedman tells that Tarragon and Shefaor decided to sell their interest in the project to reap the profits and “take some of our chips off the table.” “If the partnership does not exercise the option, then we’ll develop the property.”
Friedman adds that Tarragon and Shefaor plan to begin marketing efforts in the fall with demolition of the existing building to begin in about a year. “The timing depends on how quickly plans develop and the pre-sales efforts,” Friedman says.

Tarragon and Shefaor bought the 285-unit Lincoln Pointe Apartments for $41 million in 2004 and had originally planned to convert the complex into condominiums. However, the companies scrapped those plans in favor of constructing a new 460-unit high rise condominium tower. The project is situated on a peninsula just northwest of the Williams Island Marina on a 9.1-acre waterfront site at 17900 N.E. 31st Court. Tarragon and Shefaor has prepared preliminary plans and obtained development approvals for the new plans.

“We purchased this property intending to convert an older apartment project to condominiums. Although that strategy was sound, we realized that the site’s highest value could be obtained through more intensive development,” Friedman said in a prepared statement. “We worked closely with neighborhood groups and the town of Aventura to put together a development plan that met the town’s stringent requirements for what will probably be the last waterfront high-rise to be developed in that highly sought-after community.”