For the most part, the commercial real estate industry is sanguine
about the cycle’s end, expecting a soft landing based on the currently strong fundamentals. But could we all be suffering from
That is a theory put forward by The Counselors of Real Estate,
which, based on a recent survey, identified the current and emerging issues expected to have the most significant impact on real
estate in 2019 and 2020.
It, too, acknowledged that it may seem peculiar to cite “
complacency” as a particular risk in mid-2019 as most macroeconomic
indicators seem to point to economic conditions that can be fairly
described as ‘robust,’ if not ‘the best we have ever seen,’ it said.
Nevertheless, the Counselors of Real Estate said, the ebullience of the economic psychology may be causing us to ignore
the nature of cycles—that they peak just as a downturn is nigh.
“There is a tendency to forget in good times, as well as a false
Are We Too Complacent About the End of the Cycle?
UP Front A comprehensive look at what’s trending in the world of commercial real estate
An Opportunity Zone project in Miami’s Overtown neighborhood
made a $73.5 million leap forward with help from a trio of Bilzin
Partners Alexandra Lehson, Jay Sakalo and Jon Chassen in
Miami secured the financing for the Soleste Grand Central apartment tower.
The financing came from two loans. Bank OZK, based in Little
Rock, Arkansas, and formerly known as the Bank of the Ozarks,
issued a $55.1 million mortgage. An additional $18 million mezzanine loan came from Columbus, Ohio-based Nationwide Life
Insurance Co., a subsidiary of Nationwide Mutual Insurance Co.
Both loans are for 42 months. The mortgage has a floating interest rate, and the mezzanine financing has a fixed interest rate,
The 18-story, 360-unit Soleste project, which will have retail and
offices, will rise on 1. 3 acres, a short
walk from the Virgin MiamiCentral
train station. The tower will be completed in summer 2021 at 218 NW
Eighth St. south of the historic
Greater Bethel AME Church and east
of Interstate 95.
PTM Partners LLC, a development company founded last year to
focus on Opportunity Zones and
with offices in Miami and New York,
and Estate Investments Group, a
prolific South Miami-based developer of apartments in Miami-Dade
County, are working on Soleste Grand Central.
The project exemplifies three of the biggest trends in real estate,
namely the healthy multifamily market driven by high demand, the
construction of new projects near mass transit and the appetite for
Opportunity Zone, or OZ, investment.
“It took a really good deal and made it an even better deal
because of the long-term tax benefits for the investors,” Lehson
said of the Opportunity Zone aspect. “It’s a win for the investors
because of the tax benefits. It’s a win for the community because it
provides something that’s missing.”
One of the things missing in Miami is affordable rentals with a
growing population and prohibitive barriers to entry for first-time
At Soleste Grand Central, 40 will be priced below market rate
and the other 320 will be market rate.
Affordable housing in Miami is “a real need that needs to be
addressed,” Lehson said.
The affordable units will be allocated based on income levels.
Ten units will be designated for households making no more than
80% of the area median income, 15 for households making no
more than 100% and the remaining 15 for households making no
more than 120%, according to Scott Meyer, PTM chief investment
The area median income in Miami-Dade County is $54,900,
which means that households making no more than $65,880 would
qualify for the reserved units. Ten will be designated for households making up to $43,920 and 15
for those making up to $54,900.
The 40 units will be composed of
up to 15 studios, 14 one-bedroom
units and at least 11 two-bedroom
apartments, Meyer said.
Rent estimates for the affordable
and market-rate units haven’t been
The Opportunity Zone location is a
benefit for investors as well as the
Overtown community as the project is
expected to spur economic growth
and job creation, Lehson added.
Soleste Grand Central will cost about $100 million to build, leaving the balance not covered by the two loans open to OZ funding.
PTM and Estate Investments in February bought the site for $9.7
million through an OZ fund.
“The way the OZ funds are structured, it doesn’t eliminate the
need to put debt on the property. There is still debt, mortgage
and mezzanine debt here for construction purposes,” Sakalo said.
“The difference between the debt that’s being placed on the project and the balance that needs to be contributed for completing
the construction, that’s where the OZ funds have come in in this
The Details Behind a $73M Loan for Miami Opportunity Zone Project
BEHIND THE DEAL