John Halula, William G. McCullough and Ilana Strickon (AM Holt)
Dealmakers: John Halula, William G. McCullough and Ilana Strickon
The Deal: The Holland & Knight attorneys helped arrange a $290 million construction loan for the Surf Club Four Seasons Private Residences and Hotel, a major oceanfront redevelopment in Surfside, on July 10.
Details: For those bullish on the prospects for the Miami-area real estate market, the announcement that the 8.7-acre development received the nonrecourse construction loan was a shot of confidence: a sign that big lenders are willing to bet on the region under ever-riskier terms.
For the attorneys working to make that deal happen, the size and nonrecourse nature of the loan meant every other part of the deal had to be presented with every I dotted and every T crossed, McCullough said.
“Some of the attributes of the loan—it’s significant size, it’s nonrecourse nature and the way the construction is financed through pre-sales—did raise unique issues,” he said. “The nonrecourse nature of the loan puts pressure on other terms of the deal since other parts of the package have to be attractive to the lender.”
The deal terms would allow future advances to double the loan provisions to $580 million on the property with 900 feet of ocean frontage at 9011 Collins Ave. The new development will include three 12-story glass towers designed by Pritzker Prize-winning architect Richard Meier and two four-story buildings.
McCullough, who joined Holland & Knight shortly before long-time client Fort Capital Management called him to work the loan, was joined in the deal by partner John Halula and senior counsel Ilana Strickon.
McCullough said he’s been working with Fort Capital on the Surf Club deal since before the company acquired the property, which will be redeveloped to include 151 residential units, 77 hotel rooms and luxury retail and restaurant space.
“I began speaking to them about the Surf Club when it was just an concept and they had no idea if they would be able to pull off the acquisition of the property,” he said.
The construction loan from the Blackstone Real Estate Debt Strategies fund was complicated by several factors, not the least of which was Fort Capital’s corporate structure, McCullough said.
“The corporate ownership structure is complex, and that necessitated complex terms,” he said. “It was a monster set of documents.”
As lender New York-based Blackstone Group was negotiating the Surf Club loan, it also was working through a $120 million nonrecourse commitment to a residential project in Miami’s Edgewater neighborhood. McCullough said that had no bearing on his deal.
“They may be busy, but they certainly haven’t taken off more than they can handle,” he said.
Blackstone was represented by Michael J. Barker of Fried, Frank, Harris, Shriver & Jacobson, a New York partner, and Luis Flores of Arnstein & Lehr, a Miami partner.
Quote: “It couldn’t have been smoother,” McCullough said.
Background: McCullough and Halula are partners in the law firm’s Miami office. Ilana Strickon is senior counsel.