MIAMI—Square Mile Capital Management originated a $26.25 million mezzanine loan against Hialeah Rail Yards in Miami. Hialeah Rail Yards is a 228-acre rail yard and intermodal center next to the Miami International Airport.

Florida East Coast Industries, an affiliate of Fortress Investment Group, owns the Hialeah Rail Yard. It is subject to a 99-year lease to Florida East Coast Railway. The mezzanine loan is part of a $75 million financing on the property.

Square Mile's Jeffrey Fastov, senior principal in charge of the firm's debt investment platform, says economic conditions in South Florida are very strong overall, with the Hialeah Rail Yards providing an important link to the Miami seaport to support future shipping growth.

“We were pleased to be able to take advantage of such a terrific opportunity connected to that growth,” Fastov says. “Overall, we continue to seek high-quality investments on behalf of the expanded debt platform that we launched 18 months ago in collaboration with our strategic partner, USAA Real Estate.”      

Capital seems to be flowing from just about everywhere, according to Marc Suarez, senior vice president of Hunt Mortgage Group. He tells us the money continues to target IRR returns in the high teens which means investing in value add deals.

“We are seeing construction mezzanine that we are participating in, as it is less expensive than equity and a space where groups like ourselves are willing to play in that space of the capital stack as we understand the different aspects of development and management,” says Suarez. “This provides a great source for developers looking to take on less equity.”