Gerard Yetming, Christopher Apone and Charles Foschini (J. Albert Diaz)
Dealmakers:Charles Foschini, Christopher Apone, Christian Lee, Robert Given, Gerard Yetming and Manny Fernandez
The Deal: The CBRE brokers and an Akerman attorney handled the $31 million refinancing for the River Oaks Marina and Tower in Miami’s Health District, which closed last week.
Details: The refinancing loan backed by a Miami rental property was a solid bet on the future of the city’s Health District, explained Foschini, a vice chairman in CBRE’s capital markets group, who helped usher the deal through.
The transaction was a way to retire a costlier note taken against the River Oaks Marina and Tower, a 20-story, 199-unit apartment building between the Miami River and the Dolphin Expressway in an area where medical employers saw employment growth through the recession.
Foschini said real estate investor Saul Campanella, who owns the River Oaks property, was looking to refinance a high-interest note taken out “in a completely different market.”
River Oaks, originally intended as condos, was completed in 2011 but converted to rentals due to the sharp decline in market interest following the financial crisis. Even though the property recovered from the depths of the recession, “it’s clear that it hasn’t fully stabilized in terms of leasing rates,” Foschini said.
In essence, the refinancing came through as a way to let the current owner enjoy expected appreciation.
“The loan was coming due, and Saul Campanella needed to pay off that loan,” Foschini said. “At the same time, we have a lot of value in the property. It’s clear that the property has a long-term value.”
Foschini told lenders the market dynamics were likely to benefit River Oaks. He noted other buildings in the neighborhood were in the process of switching from rentals to condos, which will limit the rental supply and likely allow River Oaks to raise rents.
Eventually, Foschini and the CBRE team matched River Oaks with Redwood Commercial Mortgage Co., a division of California-based Redwood Trust Inc. The financing came through in the form of a 10-year partial interest loan.
Foschini said he and his team were able to “push the edges of the envelope” in terms of leverage while working with a large lender with the ability to split the financing into senior and subordinated components from the get-go.
“This greatly reduced the volatility of the transaction for a high leverage loan and allowed for a seamless closing before the refinance date of the prior mortgage,” Foschini said.
Quote: “There’s a firm belief that the health center district is going to explode, that there’s a support for condominiums,” Foschini said.
Background:Foschini, Lee and Given are vice chairmen at CBRE. Apone is a first vice president, and Yetming is a senior vice president. Manny Fernandez, a Akerman shareholder, advised River Oaks in the transaction.