The Real Deal Miami

TSG Group buys Opportunity Zone property in A&E District

Miami firm is seeking an Opportunity Zone fund partner to develop the site as a multifamily project
By Katherine Kallergis | March 15, 2019 09:45AM

1765 North Miami Avenue, Camilo Lopez, Jorge Escobar and Gerard Yetming

TSG Group closed on a development site in an Opportunity Zone in Miami’s Arts & Entertainment District, where it plans to build a multifamily project, The Real Deal has learned.

TSG Group, led by managing partners Camilo Lopez and Jorge Escobar, paid $5.9 million for the 30,000-square-foot site at 1765 North Miami Avenue. The deal marks the first for the Miami-based firm in a designated Opportunity Zone, Lopez said.

The program, passed as part of President Trump’s 2017 tax overhaul, gives investors and developers the ability to forgo and defer paying some capital gains taxes if they invest in any of the designated zones. Investors have already set up massive funds across the country, but many are waiting to invest until more regulations are released.

Escobar said the market for properties in Opportunity Zones in Miami is very competitive. “There is plenty of capital chasing these types of deals. The other deals we are analyzing are extremely expensive and there are already buyers lined up,” he said.

The property has been being marketed for its Opportunity Zone status in recent months. Colliers International South Florida brokers Gerard Yetming, Mitash Kripalani and Julian Zuniga represented the seller, BDB Miami 2 LLC, a partnership between Atlanta-based BDB Realty and Redwood Capital. Yetming said that once the Opportunity Zone frenzy kicked in, he received four offers within a few weeks from investors with the same intent as TSG Group. He said the company was “very aggressive and got the deal at the right time.”

The Miami City Commission recently approved an ordinance requiring that new projects in the A&E District seeking density and floor lot ratio bonuses must include workforce or affordable housing. The property is zoned T6-24-O, which allows for up to 24 stories, 210,000 square feet of building space and 344 units, with bonuses.

Escobar will work with Diego Bonet of Linéaire Group, a minority partner in the deal, to spearhead the regulation process. TSG Group is seeking an Opportunity Zone fund as a partner on the project. The company will hire an architect to design plans for a multifamily project with retail space on the site, and could break ground as early as next year, according to Lopez.

Newly completed development in the neighborhood includes Filling Station Lofts and Canvas, and the property is blocks away from Wynwood and a new park planned as part of the I-395 expansion, Lopez said.

While the project marks the first for TSG Group in an Opportunity Zone, the developer already owned the property at 17 Northeast 41st Street, which was also designated as one of the zones. TSG is planning a commercial development there with nearly 9,000 square feet of retail space.