Investors buy out languishing project near South Miami Metrorail: $13M
Gus Machado, known locally for his chain of Ford car dealerships, just sold the lease for a languishing project in South Miami to an investment firm for $13 million.
County records show the lease, which was transferred to the Treo Group of Miami on Monday, covers about 6.2 acres of land at the corner of Southwest 70th Street and Southwest 59th Place. It’s mostly occupied by an existing five-story parking garage, although 36,267 square feet of the land is vacant green space.
The land is owned by Miami-Dade County, and the lease requires Treo — at its own expense — to begin construction on 100,000 square feet of any combination of hotel, retail, or residential space within three years of the transfer. Within five years, the project must be completed, according to the lease.
The lease splits the garage into two pieces, a triangle and a rectangle, and Treo’s development rights extend only to the triangular portion. If Treo wants to demolish a piece or all of the triangular portion, according to the lease, it must replace it with 1,300 parking spaces — again, at its own expense.
Annual base rents are $585,000 with adjustment periods every two years for up to a 3 percent increase. If Treo doesn’t follow through on the lease’s development requirements, it can hold out for up to three years by paying a penalty of 10 percent of its annual base rent, the lease shows.
No monetary amount was attached to the lease transfer, but by calculating document tax stamps, The Real Deal extrapolated its value at $13 million.
Machado is president of a company named Permanentia, which owned the lease through an affiliate named Hometown Station since 1999. When the lease was first awarded by Miami-Dade, the firm was headed by Otis Pitts, Raul Masvidal and Jesus Fernandez.
Masvidal and his team originally planned to build a mixed-use project on the site in addition to new offices for the county’s housing authority. Those plans were mired in controversy after the team sued Miami-Dade and Masvidal was arrested over now-dismissed charges of misdirecting county funds to buy a giant watermelon sculpture.
Machado took control in 2011 and recently settled the long-standing lawsuit between the development company and Miami-Dade that proved to be one of the project’s biggest hurdles.
Now, the project is in the hands of Treo. The company, formed out of a partnership between American Realty Capital and TREO Partners, focuses on “opportunistic” acquisitions in the Southeastern U.S., according to its website.
Some of its South Florida projects include the development of the Harbour in Coconut Grove, a mixed-use project that was announced in 2013 and has yet to break ground, as well as investing in commercial and residential properties. The firm most recently doubled its money on a Coral Gables development site by selling it to apartment builder Mill Creek Residential for $10 million.