CRE Florida Partners Capital Markets is proud to announce the successful closing and funding of a first mortgage loan collateralized by a  ±42,000-square foot single-tenant/owner-user industrial warehouse property located in Boynton Beach.

The $2.5 million loan was made at a 48% loan-to-value ratio and contained a 10-year term with a 25-year amortization schedule.  The loan was procured and placed by Greg Laskody, CCIM, and was ultimately closed by a local private bank that will portfolio the loan on its balance sheet.

CRE Florida Partners (CRE) is a full-service commercial real estate company based in Boca Raton, Florida.

CRE’s Managing Partner Michael Rauch commented, “Debt placement is becoming a critical component for our clients in this very competitive lending market. Having the ability to source full-service solutions is critical to our clients’ success.”

Landlords who rake in rents from medical marijuana dispensaries may put their commercial bank accounts and title insurance at risk, according to cannabis real estate experts.

Meanwhile, cannabis retailers are baking early termination clauses into leases in the event municipalities deny permits to open dispensaries.

Dan Dietz, manager of real estate acquisitions for GrowHealthy, a Florida medical marijuana company founded in 2014, said his firm retained SRS Realty Advisors, a commercial brokerage based in Orlando, to handle all of its real estate deals in Florida.

“The SRS brokers are well-versed on state regulations on dispensaries, as well as at convincing landlords to accept the risks associated with leasing to a retail cannabis shop,” Dietz said. “We have pretty tight lease clauses we include. There are termination provisions based on the inability to achieve government requirements to operate, and line items that acknowledge selling marijuana products is against federal law.”

Dietz, whose company operates three dispensaries in Florida, was a panelist for an Urban Land Institute discussion on cannabis real estate in Fort Lauderdale. He joined Matt Ginder, senior counsel with law firm Greenspoon Marder’s cannabis practice; Nick Hansen, Southeast U.S. government affairs director for MedMen, a national cannabis company based in Culver, City, California that is currently suing Miami Beach over its dispensary restrictions; and Tara Tedrow, a shareholder at Lowndes, Drosdick, Doster, Kantor & Reed who chairs the firm’s cannabis & controlled substances group.

Leasing to dispensaries is a risky proposition because banks and major insurance companies do not want to do business with anyone tied to the cannabis industry since marijuana is still a federally banned illicit narcotic, Tredow told attendees.

“For rent checks, that is a problem,” Tredow said. “If a bank knows you are receiving rent from a cannabis company those are illegal funds you are knowingly accepting. Most federally insured banks do not care if the dispensary tenant is a licensed medical marijuana provider complying with Florida law. The money is considered dirty even if it comes from a legit cannabis company. A real estate investor or a cannabis company seeking to buy new land may also find it difficult to get title insurance if insurers find out the property will be used for marijuana purposes.”

MedMen’s Hansen said the company retained Blake Wilder to handle leasing for several locations, including in Fort Lauderdale and Miami Beach.

“They have a pretty good working knowledge of what to look for,” Hansen said. “The biggest hurdle is time and the changing political winds in cities tackling dispensary regulations.”

In Miami Beach, Hansen claimed, permitting officials had given the company assurances it could open a location on Alton Road.

“After MedMen signed a 10-year lease and invested $1 million renovating a former Panera Bread restaurant, the city commission passed new regulations that prohibited its dispensary from being within 1,200 feet of another medical cannabis store that is already open,” Hansen said.

The company details the allegations in a recently filed lawsuit. Hansen said MedMen has had similar experiences in other cities and counties.

“That is not an outlier,” Hansen said. “That kind of stuff happens all the time, every day.”


Source: The Real Deal

The Delray Beach Community Redevelopment Agency approved plans for AltaWest, a $100 million mixed-use project on West Atlantic Avenue.

The CRA board OK’d the sale agreement with BH3 Management for 7.4 acres at 600 to 800 West Atlantic Avenue. The developer has 30 days from the date of obtaining a construction permit to close on the land, according to the South Florida Business Journal.

Aventura-based BH3, led by Dan Lebensohn and Greg Freedman, was the winning bidder of six groups for the public-private partnership project. The development will include 43,000 square feet of ground floor retail, 21,600 square feet of professional office space, a 33,000-square-foot grocery store, 165 residential units totaling 272,242 square feet, 744 parking spaces, about 45,000 square feet of public space called “Frog Alley” and up to 30 workforce housing units, the latter of which includes 18 affordable housing units being built on an adjacent site.

The site is in an Opportunity Zone, which means the developer can qualify for a major federal tax incentive for developing the project. The federal program allows developers and property owners to defer and possibly forgo paying some of their capital gains taxes, or taxes resulting from the sale of certain assets.

While BH3 was the only bidder to not offer money in exchange for the land, the company said it plans to spend the most on development.

BH3 has to put $250,000 into escrow. The city commission still needs to grant the project final site plan approval.


Source: The Real Deal

opportunity zones

Most real estate professionals are now aware that the federal Opportunity Zone tax incentive program became effective in 2018 and that Qualified Opportunity Zones are located in all 50 states and Puerto Rico.

In Southern Florida, in Miami-Dade County, areas such as Coral Gables, South Miami, Hialeah and Wynwood will likely be hot spots for Opportunity Zone investment given their access to road systems and water. In Broward County, parts of Pompano Beach, Plantation, Fort Lauderdale and Hollywood are likely to see investment interest given their access to existing highways and rail systems already in place.

Developers will likely seek to purchase land in these areas in order to build with their own capital and/or equity from Opportunity Zone investment vehicles in order to utilize cheaper sources of capital and, thereby, drive better development returns due to the ability to defer capital gains, reduce those capital gains, and, if the investor stays in the investment within the zone for more than ten years, and thereafter sells at a gain, 100 percent of the appreciated value is federally capital gains tax free!

The program is applicable to developers/owners/investors of all property types including multifamily rental, retail, hotels, industrial, commercial, office, industries, self-storage, assisted living, affordable housing, etc. Moreover, it applies to not only real estate investors but to those whom have sold personal property, including stock.

In order to maximize the “opportunity” of the Opportunity Zone program, developers and investors need to move quickly to take full advantage of the tax benefit as demand increases and the time period of eligibility diminishes. Developers and owners are entitled to rely on the proposed regulations now and need not wait for final implementing rules so long as they follow the regulations as stated. Since the program only lasts until 2026, the seven-year ability to reduce capital gains by 15 percent will disappear if investments in Florida are not made by 2019 and the five-year ability to reduce capital gains by 10 percent will disappear if not made by 2021.

One of the bills that the Florida legislature is considering during its 60-day session this year is a bill introduced by Democratic state Rep. Anika Omphroy from western Broward County. In it, she proposes the creation of development agencies for each opportunity zone in the state. Those agencies would include eight to 13 unpaid members each and they would be appointed by municipalities. The agencies would be responsible for developing strategic plans for each zone and applying for state incentives, including sales tax credits and a 60 percent reduction in property tax assessments for improvements made.

What will these South Florida owners and developers get from leveraging the Opportunity Zone program for their project? Appreciation of value of investments in qualified businesses or real estate within the Opportunity Zones that are held for at least 10 years are not subject to federal capital gains tax if the investment is sold prior to Dec. 31, 2047. Accordingly, the longer an entity has an investment within a Qualified Opportunity Fund within an Opportunity Zone, the more it can reduce its capital gain―either by 10 percent (if five years) or 15 percent (if seven years or longer).

Interested investors are already focusing on deploying capital in Florida and elsewhere in substantially improving various asset classes and in creating funds to deploy in investing in various asset classes.


Source: Commercial Property Executive