Terra Capital Provides $57M Bridge Loan for Miami Mixed-Use Property

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Terra Capital Partners has provided a $57 million bridge loan to CGI Merchant Group for the recapitalization of a mixed-use property located in Miami, Commercial Observer has learned.

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The transaction converts a previous mezzanine loan provided by Terra Capital into a senior loan, highlighting an expansion of the lender’s product offerings to include first mortgage originations.

“We are pleased to have collaborated with CGI on the recapitalization of this exceptionally located property,” Vik Uppal, CEO of Terra Capital Partners, said. “This bridge loan illustrates Terra’s broadened investment strategy and the expansion of our participation throughout the capital structure. We look forward to continuing to capitalize on current opportunities in lending while maintaining our track record of disciplined investing.”

The 67-story property—located at 1100 Biscayne Boulevard—includes a 129-room luxury hotel that recently joined the Hilton Curio Collection, an upscale hotel brand within Hilton’s portfolio. Evolution Hospitality, the lifestyle brand subsidiary of Aimbridge Hospitality, will manage the hotel.

Meze-style restaurant Cvltvra, which features Michelin star Argentine chef Sebastian La Rocca, also recently opened at the property

The bridge loan—which has a two-year term with a one-year extension option—converts a $16 million mezzanine loan originated by Terra in 2015 into a first mortgage. The mezz loan, together with $38 million in senior financing from Prime Finance, refinanced a $53 million acquisition loan from MSD Capital that was provided to CGI in 2014.

The property was developed with residential condos—the Marquis Residences—on its upper floors and the hotel component on its lower floors.

At the time of Terra’s previous financing, the sponsor was in the process of converting an existing 56-room hotel into a 129-room U.S. flagship hotel for Spanish brand Meliá Hotels International. The debt was used for major room and common area improvements, including breaking the townhouses on the property’s top level down into smaller room sizes.

When the Meliá flag didn’t work out quite as planned, Terra spent 18 months working closely with CGI to determine the best path forward for the asset and came to the conclusion that a more mainstream flag with a strong reservation system was what was needed in order for it to perform at its true potential; enter, Hilton Curio Collection.

“We view the next stage as a rebranding but without the heavy lift that we encountered during our mezzanine tenure,” Dan Cooperman, Terra Capital Partners’ chief originations officer, told CO. “This bridge loan allows the sponsor to recapitalize the property and create some operating history over the next 12 months or so before securing longer-term fixed-rate financing.”

The transaction showcases a broadening of product offerings for Terra Capital. In December, the company secured a $150 million credit line from Goldman Sachs, allowing it to expand its investment strategy and provide single-source executions.

“We’ve historically been providers of mezzanine debt and preferred equity, but our credit facility from Goldman Sachs has more recently enabled us to broaden our product offering,” Cooperman said. “Instead of us having to partner with a senior lender or work through those mechanics we now have a far more efficient execution.”

Terra was able to offer significant flexibility and creativity in the deal and be a partner as well as a lender to CGI, Cooperman said. 

And, the hotel is now positioned well for significant success in its effervescent market.

“Miami as a market is pretty dynamic; you have a base of tourism as well as business coming through the port and there is a lot of positive development going on around the property,” Michael Fishbein, a director at Terra Capital. “There’s a limited amount of hospitality supply of this quality in this particular market paired with growing demands from both domestic and foreign [visitors]. As a hotel with only 129 rooms, the property is competitively positioned relative to convention center hotels and larger resort-style hotels that are to the North and South of the property.”

Raoul Thomas, Founder and Chief Executive Officer of Miami-based CGI added: “We are confident that this additional capital will enable us to accelerate the ramp-up of the hotel and position the property for long-term growth and success. We are grateful to Terra for their partnership, speed and flexibility, which allowed us to get to this successful outcome and, ultimately, make this recapitalization possible.”