Apartment Tower Scores $70M to Rise in Miami Growth Area

An apartment mid-rise building secured a $70 million construction loan, bringing it closer to rising in a Miami area poised for growth and development.

Esplanade will be an eight-story, 402-unit multifamily tower on 5.8 acres that are vacant at 11150 Biscayne Blvd. It’s an unincorporated Miami-Dade County pocket north of Miami Shores, east of Biscayne Park and south of North Miami.

The project will rise on the west side of Biscayne north of the Aldi discount supermarket and south of the organic food market Whole Foods.

The area is expected to be the next frontier where developers set their sights for new projects as the real estate market continues to boom.

“People are always looking for new areas in Miami to grow and expand,” said attorney Elena Otero, who worked on the financing deal.

And this neighborhood is it, she added.

Otero, a partner at Holland & Knight in Miami, represented lender Ocean Bank in the financing deal. At the community bank, executive vice president and chief lending officer Ralph Gonzalez-Jacobo and senior vice president and corporate lending group manager Federico Tunnermann led negotiations.

The deal closed June 26.

Developer AMAC Holdings LLC, or Arbor Management Acquisition Co., is a New York-based real estate investment firm that focuses on multifamily. It’s part of the Arbor family of companies that include publicly traded Arbor Realty Trust Inc., a real estate investment trust that focuses on multifamily properties, mezzanine and bridge loans, preferred equity investments, mortgage related securities and other real estate assets, according to its website.

This is the first time Otero and Ocean Bank worked with AMAC.

“Obviously, when it’s a first-time borrower for any institution there’s no underlying documents that have been negotiated, so we do negotiate more for a deal of this size,” Otero said. “We did a fair amount of negotiation, but it was really friendly.”

The different sides reached a middle ground on all the sticky points, Otero added, although she declined to provide specifics of the negotiations and issues.

The deal aligned in part because the area is poised for growth and development. Also, there’s a healthy demand for apartments both in this area and across the South Florida region.

“We ultimately feel that the area where this project is going to be built is an area with a great upside and marketability,” Gonzalez-Jacobo said. “The product that they are doing is going to be a product that has a lot of features that will make it extremely attractive. We should have a very, very positive market acceptance.”

South Florida is experiencing steady population growth, and the high cost of buying a home is driving residents to rent. This pent-up demand resulted in low vacancies, robust development and healthy interest from investors scooping up apartment properties.

There also is pent-up demand for apartments specifically in the area where Esplanade will rise.

“I shouldn’t say there’s no new product” there, Gonzalez-Jacobo said. “But there isn’t an overabundance of new product in that area. The project’s feasibility, the appraisal, our independent analysis reflects there’s demand within that market for the product we are going to be financing.”

Esplanade will have units ranging from 680 to 1,400 square feet.

Otero and Gonzalez-Jacobo didn’t disclose the range of the number of bedrooms or the expected rents, only saying that 51 of the units will be workforce housing.

Workforce housing unit rents are less than market rate but still cost more than affordable housing.

The tower will have a gym, a concierge, a pool and a library.

The loan covers 70% of the about $100 million construction cost. The loan has a combination of fixed and floating interest rates.

Esplanade will be finished in late 2020.

“We think it’s an area that’s going to be invigorated in the next few years,” Otero said, “so I think we will see a lot of change in this area with this project and some other projects I am sure will pop up as well.”