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Construction Lending, Partnering Picking Up

September 3, 2013

The developer of the Modern Miami apartment project in Miami’s Health District has obtained a $25.5 million construction loan.

Waterton UC Owner LLC of Chicago received the financing Friday from a group of lenders managed by HSBC Bank USA N.A., according to Miami-Dade County records.

The borrower is managed by private equity real estate firm Waterton Associates LLC. It acquired the former Urban Club site at 1444 NW 14th Ave. for $32 million last month. Waterton is completing the project on the 1.76-acre site, according to the company’s website.

Waterton is able to obtain future advances of up to $51 million from the lenders, according to loan documents. The company expects 158 one- and two-bedroom apartments in Modern Miami to be ready for occupancy as early as Oct. 1, Waterton vice president of leasing and marketing Virginia Love said Tuesday.

Waterton was enticed by the project’s location in a Health District that has “great potential,” Love said.

JAWOF Urban Club LLC of Boca Raton sold the site to Waterton. JAWOF is managed by Jericho All-Weather Opportunity Fund L.P.

Jericho managing general partner Glenn Chwatt said last month that the company completed construction of the 158-unit Urban Club rental apartment tower before selling the site to Waterton. He said the new owner might expand the project to include more units and potentially change the name of the community.

Chwatt noted Jericho remains “involved” in the project following the sale.

Jericho acquired the site in a January 2011 foreclosure auction. The previous owner, VEP Housing Developers LLC, had partially constructed the apartment tower before turning over the site. The apartment tower was “pretty much a shell” when Waterton took it over last month, Love said. The company is building the interior and amenities level. ”We are currently advertising and taking tours of the property,” she said.

Waterton’s South Florida portfolio includes Deer Chase Apartment Homes in Deerfield Beach, Lakeview Cove Apartment Homes in North Lauderdale and Watermarke at Biscayne Apartment Homes in North Miami.

Lending Uptick

The transaction is another sign that construction lending is picking up in South Florida, with lenders in some instances spreading the risk by partnering with other financial institutions.

The Related Group Inc. and its development partners on the Park Square apartment project in Doral received $55.16 million in March from lenders managed by Regions Bank. In February, an affiliate of Trump Group LLC obtained a $160 million syndicated construction loan to help build the luxury Mansions at Acqualina in Sunny Isles Beach.

More recently, the partnership between Dacra Corp. and L Real Estate Advisors on July 29 received the largest private construction financing in South Florida since the recession for their Design District project. In a $251 million transaction provided by HSBC and Credit Agricole S.A., the companies consolidated existing notes totaling about $119 million and received a future advance of more than $132 million. In the second transaction, the companies obtained a $50 million loan from Breds II Loan Holdings LLC, managed by New York-based Blackstone Mortgage Trust Inc.

Other developers have successfully secured construction financing from individual lenders. Examples include the developers of the Margaritaville Hollywood Beach Resort obtaining a $35 million construction loan from Bank of the Ozarks and the developers of condo project Echo Aventura receiving a $106 million mortgage from New York-based NorthStar Real Estate Income Trust.

CIASF Annual Commercial Finance Report

On Friday, September 13th, the Commercial Industrial Association of South Florida (CIASF) will be hosting a diverse and experienced group of panelists from various sectors of the lending industry to discuss the current lending environment, forecast trends in lending, and elucidate requirements to obtain financing and close your deal. CLICK HERE FOR DETAILS

Source: DBR

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