$250M Loan Closes for $1B Miami Mixed-Use Project

Judging by news that just emerged about the ambitious Metropolitan Miami mixed-use project, one would not know that there is a banking crisis, a struggling economy and a souring real estate market. Joint venture partners MDM Development Group and MetLife Insurance Co. have just gotten their hands on a $250 million construction loan for the Met 2 Financial Center segment of the $1 billion Downtown Miami endeavor. Bank of America N.A. is among the participating banks in the financing deal, as are Wachovia Bank National Association, HSBC Bank USA N.A., RBC Bank and Bank of Scotland PLC. Conceived as the lynchpin in Miami’s downtown urban renewal, Metropolitan Miami will ultimately encompass approximately 1,100 residential units, 750,000 square feet of office space, hotel accommodations, an entertainment complex and retail offerings. The behemoth project’s newly financed segment, Met 2 (pictured), will sprout 750,000 square feet of Class A office space in a 47-story high-rise linked to a 42-story Miami Marriott Marquis hotel with 376 guestrooms. Designed by the architectural firm of Nichols Brosch Wurst Wolfe & Associates Inc., Met 2 will also feature ground level retail space and parking accommodations for 1,500 vehicles. The Miami-Dade County office market, like most other leading office markets in the country, is showing some of the battle scars from the credit crunch and frosty economy. The average vacancy rate in the area increased from 8.8 percent in the third quarter of 2007 to 11.2 percent in the third quarter of 2008, according to reports by real estate services firm Grubb & Ellis Co. Miami’s Central Business District, however, has been holding steady, going from 10 percent to 9.9 percent, and M2 is proving to be of particular interest to prospective tenants. International law firm Greenberg Traurig signed a 15-year lease for 150,000 square feet of space in July. Additionally, there is another deal in the works. “Miami has economic incentives for businesses locating in the market and a tenant has applied for these,” Jack Lowell, vice president of Flagler Real Estate Services Inc., told CPN. Flagler is overseeing leasing at M2. With the Greenberg Traurig lease, the aforementioned pending lease and a previous 50,000-square-foot lease commitment, an aggregate 230,000 square feet of space has been claimed at M2, so far. While tenant interest in M2 is strong, other aspects of the development assisted in attracting lenders. “There are three factors that eased the facilitation of the loan,” Lowell said. “First, the quality of the project and the sponsorship; MDM and MetLife have done similar projects, like the Mellon Financial Center in Miami, which is connected to the JW Marriott Hotel. Second, MetLife is the joint venture partner on the project and, frankly, without MetLife, the financing wouldn’t have been done in this form. And finally, there’s a lot of equity in the project.”