Developer Gil Dezer closed on a $214 million construction loan for the Porsche Design Tower Miami in Sunny Isles Beach, in another major sign that banks are wading back into construction lending on select projects.
The 60-story, 132-unit, über-luxury tower which features a glass elevator that will robotically lift automobiles to private sky garages next to the residences has sales contracts totaling $550 million, according to Dezer, a veteran South Florida developer. That amounts to more than two-thirds of the units, far exceeding the benchmarks for securing the loan from Wells Fargo, the developer said.
After getting burned badly in the real-estate crash, commercial banks withdrew from construction lending. However, as housing and other sectors of the real estate market have been reviving, lenders have increasingly agreed to back construction in South Florida and elsewhere, albeit at more conservative levels than before the crash.
Lenders are looking for those developers who were successful in the down market and for those with projects in the best locations, said Dezer, who has done six earlier projects in Sunny Isles Beach alone.
Theyre cherry-picking projects. The ones theyre picking are with a proven developer with a track record and substantial bucks behind them, said Martin A. Schwartz, a partner at Bilzin Sumberg in Miami who deals with commercial real estate issues. Lenders want more equity in the projects, and they want to know they have very substantial developers.
In another South Florida example, The Trump Group, headed by Eddie and Jules Trump, recently obtained a $160 million construction loan for Mansions at Acqualina, an ultra-luxury condominium project under construction in Sunny Isles Beach.
And in July, four companies controlled by Miami developer Craig Robins and his partner L Real Estate obtained $251.5 million in financing for various properties in the Design District project from by HSBC and Credit Agricole. The developers also obtained another $50 million in financing from a Blackstone fund for future development in that high-profile, mixed-use project, according to Schwartz, who worked on both the Design District and Acqualina deals.
The Porsche project, which has units priced from $5.3 million to $32.5 million for a penthouse, requires buyer deposits of 30 percent.
Most condominium projects in the works in South Florida are using the Latin American model of taking larger deposits from unit buyers, typically upwards of 50 percent of the purchase price before closing. That has proved to be an attractive low-cost source of funding for condo developers, who are attracting cash-rich foreigners looking to invest in Miami real estate.