Via Minzer
Boca Raton, FL
$400,000,000
Loan Amount
2 Million
SF
Mixed-Use
Development
Ground-Up Construction Financing
Lotus arranged $400 million of construction financing for a unique, 2 million square foot, Mandarin Oriental-branded mixed-use development in Boca Raton, Florida. The transaction reflects Florida’s largest financing of 2017, and the 2nd largest Florida construction financing of the most recent market cycle.
Challenges:
Our Client planned to construct a mixed-use complex which consisted of a 166-key Mandarin Oriental branded hotel, 92 luxury branded condominiums, and 336 branded multifamily units, all linked to a an 18-hole Jack Niklaus designed golf course and club. The large loan ask meant there would be fewer capable lenders to transact with, many of whom would need to be educated on the Boca Raton submarket. Projections from the club component of the project also made up a larger-than-normal portion of the projected cash flows. Moreover, there were complex structuring challenges, such as minimum multiple, paydown, and release challenges to address as well as heightened restrictions issues stemming from existing EB-5 debt.
Solutions:
Lotus impactfully ‘sold the story’ of Boca Raton to the capital markets by providing detailed market comparables to convince lenders of the low volatility of annual club dues, and the ‘exclusive club culture’ of the region. Lotus also negotiated the best hybrid of origination fee, exit fee, and spread to lessen the burden on the deal budget for the Client while allowing the lender to achieve their target IRR yields. Lotus was able to successfully structure complex individual paydowns, minimum release prices, and make-whole provisions for the financing. Lotus was also able to re-wire the existing EB-5 debt by restructuring the intercreditor agreement to match the new financing. Upon closing, the transaction represented a record financing basis for individual components of the development. The future hotel component closed at $700k per Key, which is amongst the highest construction loan basis per key ever written for South Florida hospitality. The future multifamily component closed at $493 per Unit, the highest leverage ever achieved in Boca Raton and among the highest for Florida multifamily.