Merrimac Ventures and BH3 Management partnered to take over the lease of a long-stalled development site for a mixed-use project on Miami’s Watson Island.
After a series of delays and controversy, Flagstone Property Group, led by Mehmet Bayraktar, sold the lease for nearly 11 vacant acres to Merrimac and BH3. The two firms plan to finish what Flagstone started more than two decades ago. In 2001, Miami voters approved the city’s deal with Bayraktar for the city-owned land via a referendum.
Bayraktar struggled to finance the planned project, faced opposition from Miami Beach residents, and missed deadline after deadline with the city of Miami. His firm completed the mega yacht marina in 2016, and failed to build the rest of the planned development, including two luxury hotels, retail, a fish market, a public promenade and a parking garage.
A year after completing the marina, the city commission voted to end the lease with Flagstone, and Flagstone sued the city for $122 million. After Flagstone won in 2017, the city agreed to pay Flagstone $20 million.
Alex Zylberglait with Marcus & Millichap brokered the deal between Flagstone and the Merrimac-BH3 venture, which closed last week for an undisclosed amount, according to a press release. Zylberglait declined to comment. The deal does not include the marina.
The new venture will take over the 75-year lease, which includes paying $2 million in annual rent to the city, according to the Miami Herald, which first reported the lease transfer.
The 10.7-acre waterfront site overlooks Biscayne Bay and downtown Miami. The island, sandwiched between Miami and Miami Beach, is home to Miami Children’s Museum and Jungle Island.
Merrimac, led by brothers Nitin and Dev Motwani, and BH3, led by principals Dan Lebensohn and Greg Freedman, next plan to complete utility and infrastructure improvements. The joint venture will likely spend months on design, which could include adding office space. Any major changes would have to be approved by voters in the form of another referendum.
Merrimac, via Nitin Motwani, is a co-developer of the nearby Miami Worldcenter project, a $4 billion, 27-acre mixed-use development in downtown Miami. Motwani and Art Falcone have sold off portions of the master-planned community to other developers who have built or are building towers there.
Fort Lauderdale-based BH3 is known locally for Privé at Island Estates. BH3 co-developed the two luxury condo towers with Gary Cohen, and faced significant opposition from a group of nearby residents, against whom the developers ultimately prevailed.
BH3 recently launched a private equity growth strategy to provide capital to real estate, construction and other ventures, according to a press release.
Lebensohn and Freedman told the Miami Herald that BH3 had been in talks with Flagstone for a couple of years.
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