850 NW 42nd Ave
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Acquisition Price
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Investment Highlights
- Advantageous leveraged financing with the Seller participating in the preferred equity position at below market rate. As part of the terms of the acquisition, The Seller is contributing a portion of the sale proceeds to occupy the preferred equity position at a below-market rate of 5% current pay and a total all-in rate of 7%. This preferred equity is all soft-pay eliminating the possibility of default. It is also non-compounding. This is attractive pricing and leverage compared to what is readily available in the current high-rate capital markets.
- Sponsor acquiring the property for $5.75M less than the original buyer through opportunistic off-market transaction. The Property was under contract for $90M in 2022, but fell out The Sponsor leveraged their established relationship with the Seller for a favorable purchase price after the transaction with the original buyer fell out.
- The Miami MSA is geographically constrained with a growing population, a dynamic expected to fuel significant competition for housing options and rent growth. The Miami-Fort Lauderdale-West Palm Beach MSA is bordered by the Atlantic Ocean to the east and protected Everglades National Park to the west creating a lack of developable land. This market is no more than 20 miles across at any given point. Simultaneously, the Miami MSA, currently the #9 metro area in the U.S. by population size, is expected to grow by over 10% between 2020 and 2030.
- Desirable, central location provides residents with convenient access to Miami’s major hubs for employment, entertainment, and leisure activities. Nestled in the heart of a tranquil neighborhood, the property is centrally located to many of Miami’s economic and entertainment hubs. Approximately 1 mile West of the property is Miami’s Blue Lagoon Office Submarket – one of the largest office complexes in Florida. It is home to over 100 companies including Burger King’s corporate headquarters (~2,000 employees). 850 Living is less than 15 minutes from Downtown and Brickell. It is even closer to Coral Gables, Doral, and Little Havana. 850 Living benefits from being less than a mile from two of Miami’s major expressways offering residents convenient access to the greater Miami area. See the Location section for more details.
- Miami’s iconic neighborhoods, such as Downtown, Brickell, and South Beach, continue to price out many renters and drive them westward in search of a comparable product, lower rents, and proximity to employment and entertainment. The Property offers top-of-market amenities and unit finishes – 9-foot ceilings, stainless steel appliances, a resort-style pool, and more. As the much higher rents of Miami’s premier core-plus markets continue to grow, the Property’s high-end units and amenities at lower rents, but within close proximity, are likely to attract further tenants.
- Institutional management and a rebranding campaign will provide momentum for the Property’s mark-to-market rent strategy. While still in the lease-up phase, the Property sits at ~91% occupancy. With a revamp of the common areas and the installation of experienced management focused on an optimal leasing strategy, the Property will be positioned to capitalize on the growing demand for this property type and location.
850 NW 42nd Ave on Map
