The Real Deal Miami

How does The Estates at Acqualina’s $558M construction loan stack up?

The loan marks the biggest condo construction loan in Miami this cycle by far, nearly 1.7 times the next largest, for Residences by Armani/Casa
By Keith Larsen | October 05, 2018 05:00PM

The Estates at Acqualina, Chairman of Bank OZK George Gleason and Jules Trump

When Trump Group, the developers of The Estates at Acqualina in Sunny Isles Beach, scored a $558 million construction loan from Little Rock-based Bank OZK this week, it marked the largest condo construction loan of this cycle in Miami-Dade County.

How did it compare to others? It was nearly 1.7 times as big as the next biggest condo loan this cycle — a $315 million construction loan in 2016 by Wells Fargo and Blackstone to Dezer Development and Related Group’s Residences by Armani/Casa in Sunny Isles Beach.

Bank OZK’s financing was also more than four times as large as the $138 million construction loan that Two Roads Development’s Elysee Miami secured from JP Morgan this summer.

Trump Group’s deal was significant though not just for its sheer size, but also because of the timing.

Luxury condo sales have slowed significantly in Miami and banks and lenders are hesitant about providing big condo construction financing deals. Reports further suggest that downtown Miami’s condo cycle will come to an end this year as the existing supply of luxury condos has topped five years, according to the real estate consulting firm Condo Vultures.

Further highlighting this, a recent report by EWM Realty International that shows that Sunny Isles Beach, where Trump Group is building The Estates at Acqualina, is saddled with 17 years of resale inventory of condos priced at $5 million and up.  Some developers have struggled to get financing since lenders will not normally provide the loan until the condo has at least 50 percent in pre-sales.

Jules Trump said that the first tower is now 65 percent pre-sold. Many of his buyers, he said, have come from the Northeast U.S., in contrast to the past, when other developers and projects have relied heavily on foreign buyers from South America. Condos at The Estates at Acqualina are priced from $4.2 million to $14 million with penthouses priced up to $35 million. Unit sizes at the 245-unit development range from 2,917 square feet to 9,000 square feet, and from three to seven bedrooms.

For Bank OZK, formerly known as Bank of the Ozarks, the loan marks its largest condo construction loan ever in Miami-Dade County. The regional bank led by George Gleason has become one of the nation’s largest construction lenders. With just over $22 billion in assets, Bank OZK’s loan to the Estates at Acqualina represented 2.5 percent of the bank’s total assets. Between 2013 and 2017, the bank provided more than $1.2 billion in condo construction loans in Miami-Dade County, ranking it as the biggest condo lender, fueling the condo boom this cycle.

Below is a list of the next largest condo construction loans in Miami this cycle:

  1. Wells Fargo and Blackstone’s $315 million construction loan in 2016to Dezer Development and Related Group’s Residences by Armani/Casa in Sunny Isles Beach, a planned 56-story, 649-foot tall tower designed by César Pelli.
  2. Paramount Miami Worldcenter’s $285 million construction loan in 2017 provided by Inbursa Bank and BC Immigration Fund, an affiliate of New York-based Brevet Capital. The building recently topped off and is a 60-story, 562-unit tower developed by Dan Kodsi in downtown Miami.
  3. HSBC’s $284 million construction loan to Jade Signature in Sunny Isles in 2014. The building was recently completed and is a 57-story, 192-unit beachfront tower at 16901 Collins Avenue developed by Fortune International.
  4. Blackstone’s $265 million construction loan to Four Seasons Residences at the Surf Club in 2014. The completed project in Surfside includes an 80-room hotel and two 12-story condo towers that total 150 units.