Sunday Summary: Meet the King of Florida Water
It is a truth, universally acknowledged, that beachfront property is very valuable.
But what about the wet stuff next to the sand?
Normally, it is many gradations less prized. We might acknowledge that it could have potential worth — maybe with a pier on it. Or, if one were in an Emerati frame of mind, some grand plan could be fashioned to expand the beach out into the ocean. But this would require hundreds of millions of dollars and years of toil, something the average real estate investor does not have.
Alas, Bill Swaim has figured out something about the South Florida shoreline that others have not.
With a Robert Moses-esque attention to the law and tidals — er, titles — of his state, he discovered that land that is now underwater but was once dry can be bought and sold. Moreover, the boats traveling along these waterways, or the fiber-optics companies laying subterranean cable, need to pay for access to his underwater property.
Swaim has turned this into a multimillion-dollar resource, even though it has required much legal scrimmage to claim his lucre.
But it just goes to prove one thing: Florida is so valuable even the water is worth millions.
Witkoff’s next move
Banks and developers certainly agree with the assessment above.
While Steve Witkoff might be in danger of losing control of the Public Hotel in New York, he’s not even breaking a sweat raising money for his next Florida project.
Last week the Witkoff Group and Monroe Capital announced they had scored what is perhaps the largest construction loan in Florida history — $430 million from JPMorgan to build the Shore Club Private Collection, a 3-acre luxury condo project on Miami Beach’s Collins Avenue.
“This record-breaking loan underscores the tremendous confidence the market has in Shore Club Private Collection,” Steve’s son Alex, co-CEO of Witkoff, said in the release about the deal.
If not for the Witkoff deal, the big South Florida deal of the week would almost certainly have been the titanic $226 million construction loan that PMG and Greybrook secured from Related Fund Management and Lubert-Adler for the second phase of their 563-unit, mixed-use apartment complex in Downtown Fort Lauderdale.
Worth, a lot
However, we concede Citadel might have something besides retail in mind; in April they purchased the former Neiman Marcus property next door at 151 Worth for $78 million, apparently to enlarge an already exceedingly ambitious office expansion plan in Florida.
But even if those properties were used for non-retail purposes, there was at least one more sunny piece of news on the retail/hospitality front.
A 100,000-square-foot ground lease was signed at Turnberry Associates and the LeFrak Organization’s SoLé Mia for a new, celebrity-flecked Reserve Padel club in North Miami at 2251 NE 146th Street. (Yes, 100,000 square feet!)
Oh, and did we mention that Chip City is expanding in Miami? Just beware of those goodies before beach season.
Looking north … and west
Of course, the picture is much more of a checkered one if you look at, say, New York or Los Angeles. To illustrate this, there are loans that are still being written — like, say, the $252 million construction loan Cammeby’s International Group and Rybak Development received for their two-building, 499-unit, ground-up, mixed-use development at 532 Neptune Avenue in Coney Island.
Then there’s the recent Trepp assessment of Brookfield’s Gas Company Tower in Downtown L.A. Two years ago it was valued at $450 per square foot. Today it’s down to $200 per square foot.
Nevertheless, deals and opportunities are cropping up.
First, the opportunities: The classic, 1930-built New Yorker hotel’s $106 million senior mortgage is on the market. The 1,000-key hotel, which carries the Wyndham flag has been owned by the Unification Church since 1970, and includes 140,000 square feet of student housing, 110,000 square feet of office space and 16,000 square feet of multilevel retail space.
Also, the former Bowery Savings Bank (even older than the New Yorker hotel at 129 years old!) might soon be on the market for $26 million. There’s a story there: 130 Bowery Acquisition — the holding company for owners Michael and David Marvisi — defaulted on its $12 million loan for Wells Fargo last year, and a judge will decide if the sale of the property can proceed. (Read more about it here.)
As for the deals, for the right projects the money is still there. In L.A.’s Koreatown, Greystone and Affinius Capital closed a $135 million mortgage and a $37 million mezzanine loan for their 363-unit, seven-story, mixed-use development called Rise Koreatown.
Is the industrial buying spree really over?
Well, Rexford Industrial Realty did $83.3 million worth of deals during the second quarter. Most industrial owners would be extremely happy with that. But given that they closed $762.2 million in the first quarter, this is a considerable slowdown — and we’re not even mentioning the $2.4 billion in acquisitions the REIT did back in 2022.
However, given the fact that on its earnings call co-CEO Michael Frankel also reported a net operating income of $149.8 million (up 31.9 percent year-over-year) Rexford might not need to keep buying up everything in sight. (They also have another $235 million worth of deals in the pipeline. So the second quarter dropoff should be taken in stride.)
To wit, we can understand why others are wanting to get in on the industrial game. Like, say, BentallGreenOak (BGO), which announced its new BGO Industrial Real Estate Income Trust focusing on “stabilized income-oriented industrial warehouse and logistics properties” across the U.S.
Not to be outdone, Clarion Partners and EBS Realty Partners just plunked down $61 million on a shovel-ready industrial site in Southern California.
And, whatever else you want to say about the real estate market, Blackstone (BX) is doing great. Better than great. In its latest earnings call, Blackstone revealed it has an ungodly $1 trillion in assets under management. (If you laid out all that money in $1 bills, it would reach farther than the distance from the Earth to the sun!)
Eastdil makes some moves
There were some interesting hires this week. Jeffrey Davis, who had led JLL’s hotel investment platform for the last 18 years, decamped for Eastdil Secured. Eastdil also picked up Rob Walters from Avison Young to lead its data center and digital infrastructure business.
Last but not least, it was an exciting week as far as politics and government were concerned.
Yes, there’s the drama surrounding former President Trump’s target letter and trial date set for the middle of next year’s presidential campaign, but if we’re talking a little more real estate-focused there was the fact that Gov. Kathy Hochul signed a series of developer-friendly executive orders, including new incentives to change zoning to housing, and an alternative for 421a involving a plan to purchase property in Gowanus, Brooklyn, and lease it back to developers.
“I still believe we need a comprehensive solution to meet the scale of this housing crisis and we’re still pursuing,” said the governor in announcing her moves at the Powerhouse Arts Center in Gowanus , “but that does not mean we have to freeze in time trapped by inertia.”
It’s not really surprising that the governor — as well as Mayor Eric Adams — have maintained their popularity in the real estate community.
Plus, the federal government has been spending a healthy amount of money to green its own real estate footprint.
For a nice big political article, may we suggest you read CO’s interview with Dan Goldman, the newest congressman from New York City, who has a lot to say about affordable housing, the migrant crisis, anti-Semitism, bipartisanship and more.
But any discussion of Washington must include a discussion of its real estate. And its most important real estate players. For this reason we’d recommend a long, leisurely look through our Power DC list.
Have a wonderful week!