A Miami developer that's been beefing up the city's supply of transit-oriented apartments landed an $142 million refinancing deal for one of its towers.

Melo Group secured the refinancing for the completed 34-story, twin-tower Art Plaza project by turning once again to Aztec Group Inc. to arrange the deal.

Aztec president Peter Mekras in Miami searched for a lender and obtained quotes from banks, pension fund advisers, private equity funds and life insurance companies. In the end, the loan came from Freddie Mac via Berkadia's Miami office as its seller-servicer with the deal closing Dec. 11.

The 667-unit Art Plaza, which opened last June, is on the southeast corner of Northeast 14th Street and Miami Court at 58 NE 14th St.

It's one of three completed Melo projects in the neighborhood previously known as the Omni but rechristened the Arts & Entertainment District as part of the large-scale redevelopment northwest of Interstate 395 and Biscayne Boulevard.

Art Plaza is a block south of Melo's Square Station, another 34-story, twin-tower building, and three blocks west of its Melody Tower, a 36-story project across from the Adrienne Arsht Center for the Performing Arts.

[falcon-embed src="embed_1"]

Melo's fourth project in the area is 437-unit Miami Plaza under construction north of Square Station. All are transit-oriented projects within walking distance of Metromover stops in a nod to development trends catering to residents who opt to take public transit instead of driving.

The Freddie Mac financing is for 10 years with a fixed interest rate of less than 3.5% and full-term interest only.

Some of the proceeds will go toward an $85 million Art Plaza construction loan obtained two years ago and the rest toward ongoing Melo projects.

"This particular developer is actively buying land and developing additional projects so when they do refinance, because they created such substantial equity value in their projects, they are taking that equity capital and reinvesting it back in the business in the form of another land acquisition or for the construction of another project," Mekras said.

In arranging the Art Plaza funding, Mekras overcame two challenges.

Generally, new projects get refinancing after being leased and operational for up to a year, but Mekras got the refinancing even though Art Plaza had a shorter stabilized history. The tower was 95% leased in less than six months following completion.

The push to refinance was based on favorable interest rates and a move to close the construction loan so Melo can move on to other projects.

Also, there is a perception that Miami is getting a lot of new apartments after condominium construction tapped out, which could lead lenders to be more wary of putting money into an oversupply.

But Mekras noted completions will be staggered over years, dissipating concerns about market saturation.

"The only projects that are really being delivered are the ones that are under construction or on the verge of completion. The other projects are going to be delivered or break ground at a future period of time," he said. "Where Miami does fortunately have a lot of new apartments coming, they are going to be staggered over 2020, '21, '22 and '23."

With a multiyear delivery window, Mekras said, "You have to tell capital markets to step back and realize that. Once they realize that, they see we are are in a very healthy marketplace given all the demand."

This is the 10th financing package Mekras has secured for Melo. Mekras started with Aztec in 2017 after working for CREC, which was acquired by Colliers International. Among the loans he has secured for Melo are $142 million for Square Station and $108 million for Melody Tower.

The Melo Group has completed more than 50 projects that delivered over 5,000 residential units.

Instant Insights /

Aztec Arranges $142M Refi for Melo Apartment Tower in Miami

Related Stories

Recommended For You