Developers are finally putting shovels in the ground and deploying capital in Opportunity Zones in South Florida and across the country.

But with 124 qualified Opportunity Zones in South Florida, developers, brokers and investors at a recent Bisnow panel said they are largely focusing their attention on projects near Fort Lauderdale and Delray Beach’s urban core.

Jaime Sturgis of the Fort Lauderdale-based brokerage Native Realty said his company is involved in about 10 Opportunity Zone projects. Most of the projects are around 13th Street and Flagler Village in Fort Lauderdale, where interest in the area was already promising and density is high.

“There is a finite amount of land in Flagler Village,” Sturgis said during the Opportunity Zones event held at Sistrunk Market & Brewery in Fort Lauderdale. “That is another reason Opportunity Zone investors are flocking to the area.”

The Opportunity Zones program was part of President Trump’s tax plan, and was designed to encourage investment into low-income and distressed areas. Real estate developers quickly became enamored with the program, and large real estate investment funds such as EJF Capital and RXR Realty sought to raise substantial Opportunity Zone funds.

The benefit for developers and investors in an Opportunity Zone is the ability to defer and potentially forgo paying capital-gains taxes. Yet some owners of property in Opportunity Zones are listing them at prices that are much higher than investors want to pay, panelists said.

“Some folks think that the Opportunity Zone supercharges the value of your land,” said Dale Reed, an executive at Merrimac Ventures. “They are unrealistic on what their land deals are worth.”

Daniel Lebensohn, co-founder of Aventura-based BH3, is planning to build a $100 million mixed-use project in an Opportunity Zone on West Atlantic Avenue in Delray Beach. He said that high land prices across South Florida will come down in the future once property owners realize that smart investors won’t pay the prices property owners are demanding.

“It’s like the tulip craze” said Lebensohn, referring to tulip mania in the 17th century, when tulips reached ridiculously high prices and then fell sharply.

Panelists also agreed that Opportunity Zone incentives alone would not lead them to invest in a project. Most already had secured the land and had the projects penciled out before the legislation came out in 2017.

“Merrimac Ventures invested in two projects before the regulations were in released,” Reed said. “The two projects we did were because they were in the Community Redevelopment Agency area — that’s really the driving force with those projects initially.”

Nick Rojo with Affiliated Development, who is building SIX13, a 142-unit workforce apartment complex at 13 Northwest Third Avenue near Fort Lauderdale’s Flagler Village, pointed out that Affiliated’s project is getting $7 million in gap financing from the Fort Lauderdale Community Redevelopment Agency to complete the project.

“Still,  the program helps make deals more feasible, especially since rents have gone up in Flagler Village and other areas,” Sturgis said. “The Opportunity Zone is the icing on the cake, its makes the pot that much sweeter.”

 

Source: The Real Deal

A South Florida county has said no to soccer legend David Beckham.

Beckham’s fledgling soccer franchise Inter Miami CF is in the market for more space in addition to its plans to replace Lockhart Stadium in Fort Lauderdale for one of its teams and to build a stadium in Miami for a second team.

Broward commissioners rebuffed a last-minute attempt by the franchise to land a contract for the county’s Central Broward Regional Park in Lauderhill. The park has a cricket stadium that can double as a soccer venue and also has practice fields.

Club officials said their most pressing need is a site for its 150-member youth academy, which is supposed to start training in August and start playing games in September. The academy has six groupings, from under-12 to age 19. The franchise could also use extra room for its two professional teams until the Fort Lauderdale and Miami complexes are completed.

Beckham is bringing a Major League Soccer team to South Florida starting next year, along with a United Soccer League, League One team that will act as a farm club for the MLS team. The United team’s home will be at the new Lockhart Stadium, but the MLS team will also need to play there until the Miami stadium is built.

The organization offered to have 20 United games a year at the Lauderhill park in the first two years of a contract, while its MLS team is using the Lockhart site, then to hold eight United games and four MLS pre-season games at the park in future years, when the Miami stadium is done.

Except for Vice Mayor Dale Holness, Broward commissioners didn’t even want to consider the proposal. They chose instead to sign an agreement with the group recommended by county staff after a lengthy and open selection process: US Champions Soccer Academy (PSG Academy Florida), which is affiliated with FC Miami City, a United Soccer League, League Two team.

U.S. Champions will pay the county at least $1.085 million over the initial five-year contract, plus a portion of its concession revenues. It will also make $936,500 in improvements, including two lighted synthetic turf soccer fields, by 2025. The group’s sporting director is Wagneau Eloi, the former head coach of the Haitian national team and a professional player in France.

Vice Mayor Dale Holness said he wasn’t trying to have Inter Miami selected over US Champions, which runs its own academy. The US Champions academy is fee-based, while the Inter Miami academy does not charge, he said. It is run in conjunction with the MLS and academy members are selected through try-outs.

“I think that both entities could co-exist at the park,” Holness said.

They still might. The US Champions contract says the county has the right for two years “to schedule and book soccer games in the stadium and practice sessions on fields 3 and 4 that involve the USL team affiliated with the Inter Miami Major League Soccer team.” Inter Miami said it doesn’t expect any delays in constructing the Lockhart Stadium replacement.

“With Lockhart scheduled to be completed in early 2020, we are currently having open conversations with many parks to serve as an interim facility for our academy, which begins training this August,” said Paul McDonough, Inter Miami’s sports director.

The new Lockhart may be able to handle both the United and MLS team schedules until a Miami stadium is built, but McDonough said it would be better to have an alternate site for the United games.

McDonough also anticipates interest from more MLS clubs to come to South Florida for pre-season training, which starts in January, so he said additional space would come in handy.

The US Champions soccer contract comes as the county tries to get more use out of its Lauderhill stadium and fields. A separate group has a contract to schedule cricket games and tournaments there.

 

Source: SunSentinel

CenterPoint Properties has just broken ground on Port Everglades International Logistics Center, a two-building industrial and distribution facility totaling 296,207 square feet in Hollywood.

The company signed a ground lease with Port Everglades of Broward County in May 2019 and the project is slated for delivery in Spring 2020. RLC Architects headed up the project design and ANF Group will lead construction for CenterPoint’s first ground-up project in Florida. CBRE will handle property leasing, while Avison Young’s Senior Vice President Eric Swanson and Vice President Chip Faulkenberry will provide project management and development services.

Situated at 3413 and 3423 McIntosh Road, the development is close to Interstate 595 and Port Everglades Expressway, minutes away from the port and Intermodal Container Transfer Facility. The location is convenient for containers arriving at Port Everglades that require inspection services from U.S. Customs and U.S. Department of Agriculture.

The two buildings will sit on a 16.5-acre parcel. The building located at 3413 McIntosh Road will be a speculative industrial property with 151,200 square feet. The second development will total 145,007 square feet and is 100 percent preleased, with International Warehouse Services occupying 142,454 square feet. The other tenant will be the Foreign Trade Zone No. 25 at Port Everglades which will take up 2,553 square feet. John Dohm with Florida Transatlantic Holdings LLC advised the port authority on the relocation and facilitated the public-private partnership.

ASB Capital Management just recently purchased a 221,542-square-foot distribution facility located 6.2 miles northwest of the logistics center. The 2018-completed warehouse commanded $38.2 million.

 

Source: CPE

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When the Treasury Department released its most recent guidance on opportunity zones in April, investors were relieved: The rules left a lot of leeway for taking advantage of the program’s tax breaks.

In Fort Lauderdale, that’s been translating into deals this spring.

The rest of the year should be busy as well, because program rules require people who harvested gains from hedge funds and partnerships in 2018 to reinvest them in opportunity zones by the end of June. And to reap the maximum benefit from the program — a 15% reduction on taxes — money has to be invested in opportunity zone funds by the end of 2019.

“The new proposed rules have been a catalyst for deals in emerging neighborhoods all year,” said Native Realty CEO Jaime Sturgis. “Native Realty is working on developments and property assemblages in zones in Flagler Village and the 13th Street and Sistrunk corridors. The latest IRS guidance made some significant clarifications and helped the local market become more comfortable, and even more bullish, about the program.”

Sturgis will be a featured speaker at Bisnow‘s upcoming Opportunity Zones event in Fort Lauderdale June 20. Other speakers include BH3 co-founder Daniel Lebensohn, Merrimac Ventures Senior Vice President Dale Reed, Affiliated Development President Nick Rojo and Jorge Gomez-Moller, general counsel for Driftwood Acquisition & Development.

Miami-based Driftwood, a private firm specializing in hotel assets, this month launched its initial qualified opportunity zone fund, Driftwood QOF, with a target raise of $50M. The firm is already invested in two opportunity zone projects: a joint venture to develop a 218-room, dual-branded hotel called Home 2/Tru by Hilton in Fort Lauderdale, and the redevelopment of a 10-story office building into a hotel in Wilmington, Delaware.

“People are out there looking for deals,” Rojo said. But he is wary that “land sellers are unrealistic as to the actual benefit of the program.”

Rojo said Affiliated Development had a deal in the works for years to build a workforce housing apartment building in the Sistrunk neighborhood; it just so happened that it fell into an opportunity zone when the program was announced.

Affiliated closed in April without waiting for the latest round of regulations. Its 220K SF building is beginning construction and should open in late 2020.  Rojo said his deal was complicated because it involved Community Redevelopment Authority grant money, but that some of the things he learned as they hit speed bumps in the development process was that “most investors from sophisticated family offices aren’t going to invest money in a blind pool.” He said his investors each set up their own LLCs, which functioned as individual funds, and then collectively invested in the opportunity zone business.

In FATVillage, a few well-known Fort Lauderdale names announced this month that they consolidated 5.2 acres in downtown to capitalize on a parcel that is in an opportunity zone. Alan Hooper and Tim Petrillo, who are co-founders of Urban Street Development (behind FATVillage projects Avenue Lofts, Foundry and Mill Lofts) and partners in The Restaurant People (Yolo, Boatyard and more), announced they forged a strategic partnership with Doug McCraw and Lutz Hofbauer, who are credited with creating the FATVillage brand and its art walk.

Without disclosing many specifics, Hooper said in a statement that they have retained consultants and architects, and will “combine food with art and technology (FAT) and develop a neighborhood where people and businesses of all sizes can find a place to create and collaborate, to live and socialize.”

The Bisnow Opportunity Zones event will be held at Sistrunk Marketplace & Brewery, a long-awaited, 40K SF food hall/brewery/meeting space with a DJ academy, cooking classes, and art and music events.

 

Source: Bisnow