Dealmakers:Alan Axelrod and Marty Schwartz
The Deal: The Bilzin Sumberg Baena Price & Axelrod partners represented Miami Design District Associates LLC in obtaining the largest private construction financing in South Florida since the recession. Companies owned by the joint venture between Craig Robins of Dacra Corp. and L Real Estate Advisors received two loans totaling more than $300 million July 29. The loans — a combination of refinanced debt and fresh financing — are to be used to help fund Miami Design’s luxury retail development between Northeast 38th and 42nd streets and between First and Second avenues in the city’s Design District.
Details: In a $251 million transaction provided by HSBC Bank USA N.A. and Credit Agricole S.A., the companies consolidated existing notes totaling about $119 million and received a future advance of more than $132 million. In the second transaction, the companies obtained a $50 million loan from Breds II Loan Holdings LLC, managed by New York-based Blackstone Mortgage Trust Inc.
The Bilzin attorneys worked on these transactions since early March.
“Everything had to close at the same time, and we were dealing with three separate lenders,” Schwartz said.
They had to separate more than 40 properties subject to an existing loan into two packages to secure both new loans.
To accomplish this, the attorneys coordinated a series of property transfers, mergers and ownership interest transfers.
“Some of the transfers were by deed, transferring a property from one [limited liability company] to another,” Axelrod said. “Some were done by assignment of membership interests. The third way we handled it was by merging various entities together because the existing loan had a lot more borrowers.”
Following six mergers, they ended up with four borrowing companies for the $251 million loan and 10 for the $50 million loan.
Another challenge was arranging the defeasance of a commercial mortgage-backed securities loan concurrently with the closing. This was necessary because some of the properties in the overall site were used as security for the maturing CMBS loan.
The CMBS lender “gave us back the real estate, and we gave them government bonds in exchange,” Schwartz said. “The bonds produce enough income over the life of the loan to pay off the monthly debt service.”
L Real Estate is a private equity investment fund sponsored by Groupe Arnault and LVMH to invest in and develops luxury retail anchored properties.
Quote: “I’ve being doing this for more years than I’d like to admit, and I would rank this transaction either one or two” in terms of complexity, Schwartz said.
Background:Axelrod chairs Bilzin’s corporate and tax group. Schwartz is a partner specializing in commercial real estate. They were assisted by Bilzin real estate associate Bryan Hawks and corporate associate Andrew Pompa in the transaction.
HSBC was represented by a Holland & Knight team led by John Halula. Credit Agricole was represented by New York attorneys Joshua Stein and Deborah Goldman. Blackstone was represented by New York attorneys Julian Wise and Seth Henslovitz. L Real Estate was represented by Chicago attorney Julie Rademaker.