The twin-tower Square Station apartments in Miami got a $142 million loan illustrating the strength of the multifamily rental market.
Developer Melo Group, which has built and owns apartment and condominium towers throughout Miami’s urban core, obtained the Square Station loan, which was awarded to Freddie Mac with Berkadia as the seller servicer. The Square Station loan that closed Dec. 14 is for 10 years with 1.2 percent over the 10-year Treasury fixed rate.
“This is probably the largest single-asset permanent loan placed on a multifamily project in South Florida to date,” said Peter Mekras, who arranged the refinancing.
The 34-story, 710-unit Square Station was finished in June at 1424 NE Miami Place. Part of the new loan paid off the nearly $100 million construction loan from BB&T, and the remainder will be used for other Melo Group projects, Mekras said.
“Melo Group controls land for several thousand units of rental apartments in Miami’s urban core,” said Mekras, Aztec Group Inc. managing director in Miami. Melo is “pursuing development projects on several sites that they own in Miami currently,”
He didn’t specify the projects receiving funds from the $42 million loan balance.
The South Florida multifamily market has been healthy for landlords in part because of increasing population and many residents being priced out of new luxury condos.
Multifamily also has been an attractive market for investors, prompting high-priced transactions this year and creating a competitive market.
“One of the things that was the most time-consuming was spending time getting lenders and their consultants well-educated and informed about the competitive environment and the property’s position relative to that competitive environment,” Mekras said. “Fortunately, the property’s performance is one element that made the effort possible. In addition, the overall market is healthy, and we were able to substantiate that with data.”
By mid-year, there was a net absorption of 6,466 rental units, more than the 3,572 units completed during the same time, according to a Cushman & Wakefield report. Also, the asking rent per square foot increased in Miami-Dade, Broward and Palm Beach counties by about 1.5 percent.
For its part, Square Station was 95 percent leased within six months of opening.
It also is a transit-oriented development where residences are built close to public transit stops to make personal cars less essential. Square Station is a short walk from the School Board Metromover station.
Just south across Northeast 14th Street from Square Station, Melo Group is building Art Plaza, another 34-story, twin-tower apartment project.
Some of the Melo Group’s other projects are the 53-story, 648-unit Aria on the Bay luxury condo at 1770 N. Bayshore Drive; the 32-story, 258-unit 22 Skyview apartment tower at 425 NE 22nd St. in Miami’s Edgewater neighborhood; and the 36-story, 497-unit Melody apartment tower near the Adrienne Arsht Center for the Performing Arts.
Unlike some developers who sell as soon as their projects are stabilized, Melo Group generally holds on to its assets longer.
Mekras and the Aztec Group — which works for institutional investors, entrepreneurs and developers on acquisition, disposition, financing and capital needs — have secured nine loans for the Melo Group.