High Vacancy at Miramar Office Building Doesn't Stop Acquisition Loan
Aztec Group's Peter Mekras secured an $18.7 million loan that in part funded the acquisition of the Miramar Financial Center.
March 26, 2019 at 03:37 PM
3 minute read
An Aztec Group Inc. managing director secured an $18.7 million acquisition loan for the Miramar Financial Center even though the office building was half empty.
It's easy to get financing on a well-leased property with stable rental income, but that wasn't the case here.
When MFC 3700 Investors LLC bought the 131,644-square-foot, six-story Miramar Financial Center from Space Coast Credit Union in February, the property was 50 percent occupied.
“When a property is in transition and has less than its optimized net operating income, it makes it much more challenging to obtain the loan because that lender is then lending in some good faith against the borrower” filling the vacant space, said Peter Mekras, who secured the loan on behalf of the buyer Feb. 28.
The purchase price was $18.3 million, or slightly less than the loan.
About 65 percent of the financing was specifically for the purchase, and the remaining $6.545 million will be drawn down as needed to help pay costs associated with leasing, including broker commissions and improvements for new tenants.
MFC 3700 gets “a certain amount of capital to close, and then they draw the rest as needed to complete the tenant improvements and capital improvements,” Mekras said.
Asking a lender for funds by betting on future cash flow is no easy task.
It means showing the lender the existing state of the building as well as a leasing plan with future rental income projections, Mekras said.
The lender was Synovus Bank based in Columbus, Georgia. The five-year loan carries a fixed interest rate of less than 5 percent.
One the upside, the performance of the office market in western Broward County bodes well for future leasing. Developers increasingly are opting to build offices in South Florida suburbs west of Interstate 95 based on demand from tenants who want to work closer to where they live and skip more of the region's notorious traffic.
“Most of the employees of a lot of businesses are actually on the western parallel of the county and not the eastern infill location. This Miramar location is really ideally located to the I-75 corridor and connects to (State Road) 826. Employees who live on the central or western parallel of Dade and Broward have a much more convenient access to work every day,” Mekras said.
He declined to disclose the names of the MFC 3700 partners, saying it's a partnership of South Florida-based investors.
State corporate records for the company list Aztec Group Inc. founder Ezra Katz of Miami and Miami Beach attorney David Berger as company managers.
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