Press Releases
Sovereign Featured in the Daily Business Review: Broker Marcos Egipciaco works $3.2 million sale of Coral Gables site
By teckpert
May 7, 2012
Dealmaker : Marcos Egipciaco
The Deal : Egipciaco brokered the $3.2 million sale of a 1.7-acre residential site near Coral Gables, at 950 Red Road in Miami. He represented the buyer, Windsor Capital Corp. The seller was Mercantil Commercebank. The deal, which breaks down to about $42.66 per square foot, closed on April 10.
Details : Egipciaco worked on this deal for nearly a year. He first approached the bank on behalf of Windsor with an offer in the $3 million range. Bank officials said they had received higher offers and rejected Windsor’s.
“There were a lot of people bidding for the property, and the bank’s price expectation was too high,” he said. “So, I kind of put it on the back burner but kept it on the radar.”
“Three or four” investors put the property under contract, but were unable to close the deal, he said. The potential buyers “couldn’t make the numbers work.”
Then, around February, Mercantil Commercebank was ready to consider Windsor’s offer.
Once Windsor had the site under contract, a new hurdle arose.
“It was very challenging to get up to the price of $3.2 million because the construction requirement for that site is high-end and more expensive to build,” Egipciaco said.
Initially, the bank wanted $3.4 million for the property, but Windsor, led by Roland Di Gasbarro, wanted to pay $3 million for the future residential project to make economic sense.
The 75,000-square-foot parcel is zoned for up to 180 units.
“When you factor in all your hard and soft costs and the land cost and how much you can charge in rent … for you to make a return in your investment, it is very hard,” Egipciaco said. “Sometimes banks don’t understand the financial part of putting a deal together.”
An apartment project is planned at a Miami site that was recently purchased for $3.2 million – enough for the bank that seized the property to turn a profit on the deal.
Mercantil Commercebank repossessed the vacant 1.7-acre site at 950 Red Road over a $2.8 million mortgage that had gone into foreclosure.
Marcos Egipciaco, principal for Miami Lakes-based Sovereign Real Estate Group, arranged the sale of the property for $3.2 million from the Coral Gables-based bank to Windsor Capital Corp., whose principal is Roland Di Gasbarro.
Egipciaco noted that the property is zoned for 180 apartments and Windsor Capital is a larger owner of infill land. They are working on securing construction financing, he added.
Hialeah apartments in short sale at 33% off via South Florida Business Journal
By Marcos Egipciaco
Dec 8, 2011
Sovereign was featured in the South Florida Business Journal about the short sale of Amanda Palms in Hialeah.
Commercial Real Estate Roundup via the South Florida Business Journal
By Marcos Egipciaco
Sep 30, 2011
Sovereign Real Estate Group was featured in this month’s South Florida Business Journal announcing our sale-leaseback transaction involving the office building in Miami Lakes that is home to HOPS International.
Real estate buyers find quick money – but at a hefty rate via Daily Business Review
By Marcos Egipciaco
Jun 23, 2011
Investors chasing real estate deals that many lenders won’t touch are increasingly turning to the debt-fund market for bridge loans.
By: Paola Iuspa-Abbott
Real estate has always been important to Arnaud Karsenti and his company, Miami-based 13th Floor Investments, but providing short-term financing to other buyers is becoming a growing part of his investment strategy.
As the market continues to stabilize, Karsenti is looking to direct part of his $50 million investment fund into bridge loans for investors seeking quick money to buy land, distressed properties and other assets banks won’t touch.
Karsenti and others in the so-called debt-fund market are increasingly targeting investors chasing high-risk deals
“An enormous amount of capital has been raised and is ready to be deployed in the market,” Karsenti said. “As a result, people are looking for ways to find returns, and one way of finding a return is to lend rather than invest.”
“Bridge financing creates more liquidity, boosting deals that otherwise wouldn’t happen,” said Marcos Egipciaco, a broker with Sovereign Real Estate Group in Miami Lakes.
“Most investors are not able to close all-cash and therefore require bridge lending to get them to the closing table,” he added.
Egipciaco said debt and equity funds are playing an increasing role in South Florida deals.
“In the last three years, almost 100 percent of my deals were all-cash transactions,” he said. “In the last six months … that has changed. I am now seeing about 40 percent of deals come through with some sort of financing in place.”
Bridge loans are typically interest only — in the 9 percent to 15 percent range — with a balloon payment due in three years. Borrowers also face paying points up front and have to come up with a 35 percent down payment. The points, 1 percent of the loan amount per point, vary with each loan and lender.
Traditional lenders usually finance up to 75 percent of the value of an asset and may charge interest rates below 6 percent, but properties require a healthy cash flow to qualify.
Short-term financing is an option for investors looking for quick cash, either to buy or refinance a property.
Early this month, New York mortgage broker Adam Glick arranged a $5 million, two-year balloon loan in less than three weeks for a waterfront project in Miami. The collateral includes an apartment building, an office building and land appraised at $11 million, said Glick, managing member of Maxim Capital Group, which focuses in the New York and South Florida markets.
“The borrower needed the money in a matter of weeks to refinance and pull some cash out of the property for other opportunities,” Glick said.
Glick declined to disclose the name of the borrower or location of the properties but according to Miami-Dade public records, on June 3 Maxim’s Maxim Credit loaned $5 million to entities affiliated with developer Irwin Tauber. The properties acquired include a 26-unit apartment building, a 26,000-square-foot office building on East Bay Harbor Drive in Bay Harbor Island and a 4.24-acre parcel in North Miami.
Glick said Maxim was confident the loan was safe because it was “overcollateralized” by properties that had the potential to be upgraded or sold for a profit, had good cash flow and were well located.
The advantage of debt funds over traditional lenders is the speed in which they can make a loan because funds don’t have the same layers of underwriting. But higher interest rates typically boost the cost of borrowing, Miami mortgage broker Adam Greenberg said.
“[Debt] funds don’t give you the best interest rate,” said Greenberg, managing director of BayBridge Capital Advisors, which provides bridge loans. “They compete on other facets of a transaction like timing, leverage, flexibility — that sort of stuff.”
Greenberg said he recently helped a client secure a bridge loan for under $10 million to acquire a retail center in North Miami Beach.
The property, which had been repossessed by a bank, was more than 30 percent vacant and needed to be re-tenanted and remodeled, he said. Still, a debt fund financed 80 percent of the purchase price, Greenberg said, declining to name the lender, which charged the borrower 2 points and 12 percent interest on the two-year loan.
“The lender was very comfortable in owning the asset if things went bad,” he said.
Debt funds are betting on the recovery of the real estate market. When they lend money to buyers of distressed properties, they hope that two years will be enough time for a property to be stabilized and the loan paid off.
Bernie Navarro, president of Benworth Capital Partners in Coral Gables, said the company makes bridge loans ranging from $400,000 to $4 million. His clients are often investors who acquire distressed properties with the intent of renovating them and improving the tenant mix. Once the asset is stabilized, the borrower can flip the property or replace the bridge loan with permanent financing, said Navarro, who charges from 11 percent to 13.5 percent interest in bridge loans.
“So we are not going to be in it for the long term,” he said. “We are going to be in it for a short while, stabilize the property and move forward.”
Navarro said he doesn’t make a loan unless the borrower has a clear plan to add value to the property and boost its cash flow.
“Every deal we do, we make sure we understand the exit strategy,” he said.
Navarro, who started the debt fund in 2008, said his business is picking up, in part because investors are making deals as values begin to strengthen.
Sovereign’s Egipciaco agrees. He said foreign investors are doing much of the dealmaking.
“Now that [sale] volume has picked up, they feel a lot more comfortable making buying decisions,” he said. “They see South Florida as cheap relative to all other major cities worldwide.”
Bridge loans may be the answer to some investors chasing discounted properties but they don’t make sense to Abraham Wien’s clients — publicly traded foreign companies buying real estate in South Florida.
Wien, managing partner of Legacy Assets in Miami, performs due diligence and underwriting of proposed acquisitions on behalf of clients. That includes analyzing the cost of borrowing compared with the cash flow generated by the target property.
Wien said nearly 60 percent of his clients buy properties using traditional loans, some with interest rates below 6 percent.
“Bridge funds are very difficult,” he said. “We don’t use them because their interest rates are very high. … The interest rate would consume the cash flow of a property.”
Miami investor Karsenti understands that feeling. While his fund is branching out to become a bridge lender, his investment firm stays away from short-term financing.
“Rather than taking a bridge loan from someone else, we would rather pass on that return to our investors,” Karsenti said. “So we only get a loan if the rate of the loan is lower than the yield on the deal.”
Read this article last month title “Turning Trashed Developments into Real Estate Treasures” about Black Point Marina. The article cites our role in evaluation unit prices and securing FHA approval for smaller down payments covered by the $8,000 tax credit.
Sovereign Real Estate Group was featured in the Daily Business Review about the sale of the 60 unit building Vista del Rio for $6.2 million.
Sovereign Real Estate Group was featured in the Daily Business Review about the transferred title of a 60-unit apartment building and two vacant parcels in Miami to Vista Rio Partners of Colorado in a deed in lieu of foreclosure with a $4.9 million consideration value.
Sovereign Real Estate Group was featured in the Daily Business Review about our sellout of Enclave at Blackpoint Marina in Cutler Bay.
Sovereign Real Estate Group was featured in the Daily Business Review about the purchase of Emerald Place in Hollywood, FL.