2699 S. Bayshore Dr. (J. Albert Diaz)
The recent high-profile purchase of a Coconut Grove office building is only the first of what is likely to be a string of transactions for a Miami Beach private equity fund, the CEO of that company told the Daily Business Review.
Camilo Miguel Jr., CEO of Miami Beach-based Mast Capital, said, “the next four or five months” would be white-hot for his company, which this week closed a $29.5 million deal to buy 2699 S. Bayshore Drive. In that deal, Mast got a nine-story office building in the heart of Coconut Grove with unobstructed views of Biscayne Bay. The building—105,062 square feet of office space on a triangular 1.16-acre lot—was scooped up by a partnership between Mast, Miami-based 13th Floor Investments and Greenwich, Conn.-based Wexford Capital. The partners financed the deal fully with cash on hand.
But Miguel says it’s only the first car in the train of large South Florida property transactions he’s laying the tracks for.
“The environment today is one where there’s an abundance of capital sitting on the sidelines,” Miguel said, noting there’s more investor cash ready to be used than opportunities to spend that capital.
Mast is looking to put some of that money in play this year, looking for preferably unlisted opportunities in areas where development is difficult, “real estate that’s irreplaceable in places where there’s high barriers to entry,” according to Miguel.
“We really pride ourselves in our ability to find opportunities by reaching out to owners and finding their needs,” Miguel said.
Such was the case in the 2699 S. Bayshore deal, where Miguel’s investment consortium paid almost twice the $16 million the office building fetched in May 2012, enticing a seller who was not actively offering the property. Miguel said that besides offering the large premium, “speed of close was a component” in the deal—the transaction closed just 58 days after the initial approach, he claimed.
Also part of getting the deal done, Miguel said, was finding the right partners.
“Every deal has different needs and it goes back to understanding the tolerance for risk at different levels,” Miguel said. “Some guys like doing development, some guys don’t. Some guys need cash-flowing assets, some guys don’t.”
In this deal, Miguel suggested the fact the property was fully leased with prime tenants was important, as was the fact there are potential redevelopment opportunities within the space.
The property is zoned for a residential condo or mixed-use tower and is in an area of Coconut Grove that city officials have been amenable to upzoning. Next door to the just-bought building, at 2701 S. Bayshore Drive, developers Terra and Related Group are building Park Grove, a high-end condo. Terra is also developing another residential project just north of the site at 2675 S. Bayshore Drive.
Mast already has a few recent deals under its belt. Last year, the fund acquired a residential property at 1500 Brickell Ave. and convinced local politicians to allow a use variance on the property. Miguel’s now planning a high-end retail space or restaurant there. Mast also bought a series of lots on South Beach at approximately 311 Meridian Ave, where he plans to develop residential condos.
Miguel said property in South Beach’s SoFi (South of Fifth Street) neighborhood fits the kind of investment he’s trying to arrange or make, in a submarket where “it’s challenging to make things of scale.”
“The issue in South of Fifth is that there’s a lot of demand there,” he said. “It’s become a very affluent neighborhood with great restaurants. There are a lot of different types of groups that want in.”
Federal filings from earlier this year show Mast is raising at least $4.64 million to fund its 311 Meridian venture.
State filings also show Mast recently registered a limited liability company as “100 SP Owner LLC.” In the real estate investment world, it’s common for buyers to register a shell company whose name references the address of the property they intend to buy.
Could “100 SP” be a reference to some famous address in SoFi?