Cohen Financial has arranged $110 million in financing for Property Markets Group’s first development project in Miami, Florida, a sleek residential rental tower known as 300 Biscayne. The financing includes an $80 million construction loan from Centennial Bank and $30 million in preferred equity investment from Square Mile Capital.
The non-recourse senior loan coupled with the preferred equity made for a blended loan-to-cost just north of 80 percent, Eric McGlynn, who arranged the deal with Kevin O’Grady and Daniel Sheehan out of Cohen Financial’s Miami office, told Real Estate Capital.
McGlynn noted that most local, South Florida banks are approaching or have met construction lending caps and will typically only consider smaller construction loans.
“It’s a large loan and a lot of banks can’t do it on their own, so we would have to put together a syndicate,” he said. “It was a lot easier to deal with one bank, but that required us to go out of state.”
That’s where Arkansas-based Centennial Bank came in. The bank could not only handle the large loan but was willing to go non-recourse, which was one of the borrower’s demands. The preferred equity portion of the deal was a strategic move too, as it allows the bank to count the $30 million towards the increased capital requirements required under Basel III’s High-Volatility Commercial Real Estate (HVCRE) regulations.
Loans meeting the HVCRE criteria, including some construction loans, receive a 150 percent risk weighting for regulatory capital purposes on a bank’s balance sheet, versus the previous 100 percent requirement.
The 464-unit multifamily 300 Biscayne project is located at 243 NE 3rd Street, half a block off Biscayne Boulevard and directly across from the Bayside Marketplace in downtown Miami, Florida.
The efficient floorplans will enable PMG to keep prices down, some $300-400 cheaper than average one-bedroom prices in the Miami market, which was a major differentiator and draw for lenders who bid on the project, McGlynn said.
The tower was originally planned as one of two condo towers, but PMG decided to make 300 Biscayne into apartments, based both on current market conditions and its long-term strategy to work more rentals into its portfolio. As of now, plans still call for an adjacent condo tower despite some chatter that the condo market could be overheating.
“The rental market here has been undersupplied for a long time,” McGlynn said. But, he added that the multitude of new rental projects coming out of the ground will likely “bring the market into equilibrium for rental supply.”
Cohen Financial secured the financing in partnership with Steven Fischer of SRF Ventures, a real estate advisory firm.